ORAL ANSWERS TO QUESTIONS

SCOTLAND

The Secretary of State was asked—

Scottish Business Overseas

David Amess: What steps Ministers in his Department are taking to promote Scottish business overseas.

Michael Moore: The Government have taken a range of actions to promote Scottish businesses overseas, including the appointment of Brian Wilson as a UK business ambassador. I have also held recent discussions with the Canadian Trade Minister and with business leaders in Canada and the USA.

David Amess: How many Scottish business leaders has the Secretary of State met who believe that the Scottish trading position will be improved if Scotland leaves the United Kingdom?

Michael Moore: No Scottish business leader has ever put that point to me, possibly because they recognise the strength of Scotland’s being in the United Kingdom and the fact that there are 162 UK Trade & Investment offices backed up by 270 consulates across the world.

Angus Robertson: Last year, the Scotch whisky industry was worth more than £4.2 billion; it is one of Scotland’s and the UK’s biggest exporting industries. Can the Secretary of State confirm that the UK Government charge for its promotion internationally? How much do they charge and why?

Michael Moore: I join the hon. Gentleman in welcoming the success of the Scotch whisky industry, which is a huge part of the overall success of Scotland’s food and drink sector and goes alongside other significant economic areas such as financial services, energy and the like, which are so critical to Scotland’s exporting potential. I do not want to put any of that at risk; that is why I think that Scotland’s being part of an international network of embassies, consulates and UKTI offices is the best way forward.

Angus Robertson: Everyone will have noticed that the Secretary of State did not answer the question. I asked him whether he would confirm that the UK Government charge for the promotion of Scotch whisky internationally. Apparently, the Foreign Office does charge—£3,000 a time to Scottish Development International to promote Scotch whisky at international events. That is utterly ridiculous. What is he doing about it and when is it going to stop?

Michael Moore: The hon. Gentleman chooses to ignore the fact that, thanks to the UK Government, we have our network of offices across the whole world, and our embassy network is second to none—certainly when compared with what an independent Scotland would have. Scotch whisky is in a much stronger place as a result of Scotland’s being part of the United Kingdom than it would be if we were independent.

Robert Smith: Does the Secretary of State recognise how important the energy industry in north-east Scotland is to driving export potential for Scotland? We have built a strong home base for skills and technology, honed in the North sea, and that is a base for great export potential to provinces around the world.

Michael Moore: I pay tribute, as I have in the past, to my hon. Friend’s significant work in this area. He is an undoubted champion of the oil and gas sector, not just in north-east Scotland but across the whole UK. He is right to point out the sector’s potential and will be aware that I met the Brazilian ambassador and Brazilian oil and gas interests in Aberdeen a few months ago. I look forward to returning to Brazil to focus on oil and gas issues in the next few weeks.

Jim Sheridan: I go back to the question of Scotch whisky, which accounts for 25% of all UK food and drink exports, yet is held back by various tariff barriers around the world—most notably in India, where there is a tariff of 150%. Will the Secretary of State set out what action the Government are taking to help whisky industry export growth in other countries?

Michael Moore: The hon. Gentleman is right to highlight the importance of the whisky sector, not least to large chunks of Scotland; it is not just concentrated around the distilleries. We are working hard with Scotch whisky interests to ensure that we work within Europe to break down the barriers in India and elsewhere. There is a level of support for the Scotch whisky industry that it could not hope to have in an independent Scotland.

Fuel Duty

Bob Blackman: What effect cancelling the fuel duty rise planned for January 2013 will have on motorists in Scotland.

David Mundell: Cancelling the fuel duty rise planned for January will help owners of the 2.7 million motor vehicles in Scotland, saving a typical driver £40 a year and a haulier £1,200 a year.

Bob Blackman: Does my right hon. Friend not agree that cancelling Labour’s planned tax increases on fuel will save the average Scottish motorist more than £600 during the life of the coalition Government?

David Mundell: I agree that the deferral of Labour’s planned duty rise in April this year will mean that fuel will be 13p a litre cheaper than it would have been under a Labour Government.

Cathy Jamieson: I welcome the Government’s listening to our call to stop the rise. However, what discussion has the Minister had with the Scottish Government about what assistance can be given to small independent petrol retailers, particularly in rural areas, to ensure that people living in those areas, and not just those who live in urban areas, are able to take advantage of decent pricing?

David Mundell: The hon. Lady makes an important point. At the end of this month I will meet fuel distributors and MPs from rural areas, and she is very welcome to join that meeting to discuss fuel prices and fuel distribution in rural areas.

Alan Reid: I am delighted that the Government have cancelled Labour’s fuel duty escalator and cut fuel duty by 1p on the mainland and 6p on the islands. Will the Minister support the call to lobby the European Union to extend the island fuel duty discount to remote parts of the mainland such as mainland Argyll?

David Mundell: Indeed. My hon. Friend will have noted that in the mid-term review the coalition Government have undertaken to examine the possibility of extending the 5p reduction to areas of the mainland that are similar to island communities.

Angus MacNeil: The cut in fuel duty through the rural fuel derogation has been very welcome in my constituency. I remember asking Labour to do that when in power, and it refused. When will it be extended to Skye, Lochaber, Argyll and Wester Ross—areas through which my constituents pass on the way home and on the way back to the mainland?

David Mundell: As I said in my answer to my hon. Friend the Member for Argyll and Bute (Mr Reid), in the mid-term review the coalition Government have undertaken to examine exactly that possibility.

Robert Halfon: The Government have done their bit in cutting fuel duty at the pumps. Will my right hon. Friend lobby the oil companies to take on their responsibility in this respect, because when international oil prices fall, prices still remain high at the pumps?

David Mundell: Indeed. I am sure that my hon. Friend welcomes the fact that there is an Office of Fair Trading inquiry into fuel prices, and we very much look forward to seeing the outcome of that in January.

Michael Connarty: Has the Minister looked into whether these reductions, or lack of increases, have been passed on to motorists in Scotland? Is he aware that in Kennington road in London one can buy petrol at 129.9p? Besides the fact that there is a 5p differential between the price in London and the price in my constituency, it is now more expensive to buy petrol next to Grangemouth, where petrol is produced for Scotland, than in the Kennington road in London. Is the Minister doing anything to make sure that motorists are not being ripped off by those selling the fuel?

David Mundell: The price of fuel at different petrol stations in different communities has been a matter of long-term concern, and that is why the OFT is conducting an inquiry into it. In my previous answer, I indicated that the results of that inquiry will be available in January, and they will make very interesting reading.

Scottish Independence (Use of Sterling)

David Mowat: What discussions he has had with ministerial colleagues and Ministers in the Scottish Government on the continued use of sterling in an independent Scotland.

Michael Moore: The United Kingdom Government are undertaking a programme of work to inform the debate ahead of the referendum. This involves looking at a range of issues including the importance of sterling to all parts of the United Kingdom. There have been no discussions with the Scottish Government about the use of sterling by an independent Scotland.

David Mowat: The decision to use sterling after separation means that the Bank of England will be the bank of last resort and the lender of last resort to Scotland. To avoid a repetition of what happened in the eurozone, the UK residual Government must have an oversight role in Scottish spending plans. Has this been sought, and on what time scale will it happen?

Michael Moore: There have been no such discussions. The important point is that sterling has served Scotland and the whole of the UK well for 300 years. We have seen in the eurozone the risk of having a formal monetary union without a fiscal union. A fiscally independent Scotland would create real complications in that regard. All this would have to be negotiated after the referendum vote, and it would take some persuading for people in the rest of the UK to take on the role that the Scottish National party wishes for it.

Stewart Hosie: The Minister knows very well that the Scottish Government intend that Scotland should continue to use sterling after independence, and as sterling is a fully convertible and floating currency there is precisely nothing to stop that. While it makes far more sense to have a formal union, does he not agree that a stability pact based around debt and deficit levels is perfectly sensible but can in no way be portrayed as a foreign currency running Scotland’s economy?

Michael Moore: First, I am sure that the whole House will join me in welcoming the hon. Gentleman back to his place. Although we do not always agree with all his points and arguments, we are absolutely delighted with his contribution. We are glad to see him in good health and wish him all the best.
	Should Scotland vote to become independent in the referendum—I do not believe that it will—the use of sterling would be a matter for negotiation. The reason for the Bank of England’s credibility as the lender of last resort at present is that we have a single, central fiscal authority and the UK taxpayer stands behind it. To complicate that would require negotiation with the rest of the UK, which would have to consider its interests. We cannot have a one-sided wish list; we have to recognise that there will be negotiation.

Peter Bone: Is not the hon. Member for Dundee East (Stewart Hosie) and, in fact, the Secretary of State wrong on this? If there were an independent Scotland, I assume that it would want, mistakenly, to apply to join the European Union, so would it not then be required to accept the euro?

Michael Moore: There are many ways in the which the SNP and the hon. Member for Dundee East are completely wrong—I agree with the hon. Member for Wellingborough (Mr Bone) on that. He makes an important point that, amid all the SNP’s turmoil over its position on Europe, it has never set out how it would negotiate the opt-out from the critical central requirement to join the euro.

Jim McGovern: Last year, on 5 December, I took part in a Westminster Hall debate in which the Under-Secretary said that he had commissioned a report into why the separatist-led Dundee city council was the worst-performing local authority in Scotland with regard to the Work programme. I have contacted his office several times since, but he has yet to get back to me. On 19 December, he said that I would get a letter with more details, but I have yet to receive it. When will the report be published?

Mr Speaker: I am sure that the hon. Gentleman wanted to inquire about the continued use of sterling in an independent Scotland.

Michael Moore: I am not sure how the Work programme would be affected by a different currency or the currency arrangements after independence, should that be the way we go. My right hon. Friend the Under-Secretary would be delighted to meet the hon. Member for Dundee West (Jim McGovern) as soon as possible to discuss the important issue that he has raised. We will make sure that that happens.

Mr Speaker: It may be that the hon. Member for Dundee West really wanted to come in on question 4 and that he got ahead of himself. I do not know, but it is done and I am sure that he is grateful.

In-work Benefits

Gregg McClymont: How many people in Scotland will be affected by the Government’s plan to limit the uprating of in-work benefits to 1%.

Ann McKechin: How many people in Scotland will be affected by the Government’s plan to limit the uprating of in-work benefits to 1%.

David Mundell: Yesterday the Department for Work and Pensions published an impact assessment for the Welfare Benefits Up-rating Bill, which states that about 30% of all households will be affected by the measures contained in the Bill.

Gregg McClymont: I thank the Minister for that answer. Even after changes to tax allowances, a single-earner household with children in my constituency will be £534 a year worse off by April 2015. With that priority in mind, does the Minister still believe that the Government should go ahead with their priority of a £2,000 a week tax cut for millionaires?

David Mundell: What I believe is that the Government should continue to work to sort out the mess in the economy that the hon. Gentleman’s Labour Government left behind. The measures announced yesterday will save £5 billion and he and his colleagues have not given any answers as to where they would find such savings if they did not implement those changes.

Ann McKechin: One in five working families in Scotland who rely on tax credits will see a cut in their real income as a result of these changes. Many of them rely on low-paid, temporary and part-time jobs when, in fact, they want permanent, full-time jobs. What steps will the Minister take in 2013 to tackle the scourge of under-employment in Scotland?

David Mundell: The Secretary of State will work with the Scottish Government and stakeholders in Scotland to set up an employability forum, which will look at the two Governments and all interested parties in Scotland working together to ensure that we get more people into full-time employment.

Eleanor Laing: Does the Minister agree that, for better or worse, the Scottish economy is part of the UK economy, and that the economy of our whole country will not improve unless and until we bring public spending under control?

David Mundell: I absolutely agree with my hon. Friend. The benefits issue is an example of where, simply to curry favour with the electorate, the SNP Scottish Government are making promises that they could not possibly keep in an independent Scotland.

Margaret Curran: Will the Minister tell the House how many members of the armed forces in Scotland will see their incomes cut as a result of last night’s vote?

David Mundell: Last night’s vote was about ensuring that we have a sustainable welfare system. The hon. Lady’s answer on all these issues is more borrowing, more spending and more debt. She cannot say how she would fund the rises in benefit for which she voted.

Margaret Curran: What a disappointing answer. The answer is 4,000 members of the armed forces. There might be a Liberal Democrat leading the Scotland Office, but Scots can see that this Government are just the same old Tories. In 2010, the Department told us that it had absolutely no desire to see people losing their jobs or being in worse circumstances than they were in before. Will the Minister explain why the Government are failing the test that they set themselves?

David Mundell: What the people of Scotland know is that it is the same old Labour: there is no apology for the mess that it left the economy in and its only proposal is more spending, more borrowing and more debt.

Brian H Donohoe: Question 5, Mr Speaker.

Mr Speaker: No, not number 5. The hon. Gentleman must be patient. I am coming to him. I am saving him up. He is worth saving.

Eilidh Whiteford: It will come as no surprise to the Minister to learn that I opposed the cap on in-work benefits last night because it will hammer thousands of families in Scotland who are trying to bring up children while working hard in low-paid jobs. However, does he share my surprise that some senior MPs, including members of the last Labour Government, who left his Government with an almighty mess in the public finances, did not even turn up to vote last night?

David Mundell: Nothing that SNP Members say or do surprises me. The SNP’s position is totally hypocritical. The Scottish Government are asking nurses and NHS workers to take a 1% pay rise, yet they want benefits to rise by more than that.

Food Banks

Brian H Donohoe: How many people in Scotland have used food banks in the last 12 months.

Lindsay Roy: How many people in Scotland have used food banks in the last six months.

David Mundell: Jobcentre Plus operates a food bank referral service. However, the Government do not hold information on the number of people seeking assistance from food banks.

Brian H Donohoe: We are in 2013 and not 1813, are we not? The need for food banks this year in Scotland is an abominable reflection on society. There is even a food bank in Prestwick, which is one of the most salubrious parts of my constituency. According to the Trussell Trust, 15% of the people who use that food bank are in employment. What an indictment that is of the Government.

David Mundell: Although I share the hon. Gentleman’s concern about the use of food banks and the fact that there are vulnerable people in crisis situations, I do not accept the pretence that food banks have come into existence since this Government came to power. That is simply not true. There were food banks under Labour; it is simply that they were not advertised in jobcentres.

Lindsay Roy: What message does the Minister have for the increasing number of people in my constituency who are being forced to go to food banks to feed their families? What will he do to alleviate that situation?

David Mundell: I acknowledge the hon. Gentleman’s concern because he instigated a useful Westminster Hall debate on this matter. The Government will continue to do all that we can to help and support the vulnerable in his constituency and elsewhere.

Gordon Banks: Two years ago, the Secretary of State said about the Government’s plans that
	“the horrible truth is that across the country everyone is going to have to make a contribution”.
	The horrible truth of life in Scotland under his Government, however, is that a food bank in my constituency has experienced a father walking a 15-mile round trip for a bag of food to feed his family. Is that an appropriate contribution while the Government give a £2,000 a week tax cut to millionaires?

David Mundell: I have already indicated that the Government are always concerned about those who need to use food banks in any circumstances, but I will not take any lectures from the hon. Gentleman and the Labour party on millionaires when they want to give them child benefit.

Superfast Broadband

Pauline Latham: What recent discussions his Department has had on the provision of superfast broadband in Scotland.

David Mundell: The UK Government have allocated a £100 million investment for rural broadband projects in Scotland. It is the responsibility of the Scottish Government to deliver on that. Scotland Office officials keep in close and regular contact with Broadband Delivery UK and Department for Culture, Media and Sport colleagues overseeing the roll-out of all broadband projects in the UK.

Pauline Latham: In the Minister’s discussions with Scottish Government Ministers, have they told him what progress they are making towards implementing superfast broadband access?

David Mundell: It is clear that people throughout Scotland want broadband access implemented as soon as possible, particularly in rural areas. We will work closely with the Scottish Government to ensure that they deliver on the undertakings that they have given on the £100 million that they have received.

Russell Brown: Although I recognise the important role that the Scottish Government play in the provision of broadband in rural areas—[Interruption.] I thought those cheers were for me. The Minister is fully aware that in areas such as his and mine, small and medium-sized enterprises depend upon good connectivity. What is his Department doing to ensure that the Scottish Government are delivering?

David Mundell: I can assure the hon. Gentleman that we will hold the Scottish Government to account for that investment. Although the UK Government have funded investment in the cities—in Edinburgh, Aberdeen and Perth—we want the Scottish Government to deliver for Dumfries and Galloway and equivalent rural areas throughout Scotland. [Interruption.]

Mr Speaker: Order. I appeal for a bit of order. There are now far too many very noisy private conversations taking place. Let us hear Sir Malcolm Bruce.

Malcolm Bruce: I thank the UK Government for the support they have given to Aberdeen city’s bid under the small cities broadband fund, and for their contribution along with the Scottish Government, the city of Aberdeen and Aberdeenshire to the expansion of broadband. May I urge the Minister to recognise that although we want superfast broadband in the cities, we also need access in rural areas at sufficient speeds to enable businesses to flourish rather than forcing people to migrate to cities?

David Mundell: I can advise the right hon. Gentleman that I have met Aberdeenshire council to discuss exactly that issue. Although superfast broadband is welcome in Aberdeen, we want it rolled out into Aberdeenshire as well.

Ian Paisley Jnr: The use of superfast broadband is of course one effective way to promote the identity of our country. Will the Minister welcome to Parliament today the Ulster-Scots Agency? It is promoting the links between Ulster and Scotland, of which the Secretary of State is a wonderful example as a born Ulsterman who is now serving Scotland. Will the Minister use superfast broadband to continue to promote our wonderful culture and shared Ulster and Unionist heritage?

David Mundell: The Secretary of State is a wonderful example of many things, and the answer is yes. [Interruption.]

Mr Speaker: Order. There is now far too much noise. I am sure the House will want to hear Mr Karl McCartney.

Autumn Statement

Karl McCartney: What assessment his Department has made of the effect of policies announced in the autumn statement 2012 on Scotland.

Gemma Doyle: What assessment he has made of the effect on Scotland of the autumn statement 2012 .

Michael Moore: Against a difficult economic backdrop, the autumn statement set out a range of measures to protect Scotland’s economy, to help equip Scottish businesses to compete in the global race and deliver growth, and to ensure that businesses and households in Scotland are treated fairly.

Karl McCartney: Would my right hon. Friend confirm that one disastrous consequence of any hypothetical independent Scotland would be a disjointed transport system? Although my Lincoln constituency might benefit from more capacity on the east coast line, does the Minister agree that many people in Scotland would not be happy to see direct rail services on the line from London to Edinburgh and beyond curtailed in any way?

Michael Moore: My hon. Friend makes an important point about the importance of keeping Scotland within the United Kingdom, to the benefit not just of Scotland but the whole United Kingdom.

Gemma Doyle: The Government said that they would get the deficit down, balance the books fairly and get people back to work. However, the deficit is billions of pounds higher this year than it was last year, one in five working families is having its tax credits slashed, and long-term unemployment is rising faster in Scotland than in the rest of the UK. Is the Secretary of State happy to be part of a Government who are failing all their own tests?

Michael Moore: The deficit has come down by a quarter, and the hon. Lady should acknowledge that the Government are clearing up the mess that Labour left behind. We will take absolutely no lessons from the hon. Lady or her party. We have cut income tax for the lowest earners: they did not. We have restored the earnings link to pensions: they refused to. We have helped millions of Scottish motorists during difficult times: they were planning to do the opposite. We will take no lessons from Labour on how to manage the economy.

PRIME MINISTER

The Prime Minister was asked—

Engagements

Karl McCartney: If he will list his official engagements for Wednesday 9 January.

David Cameron: This morning I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.

Karl McCartney: May I wish you, Mr Speaker, the Prime Minister and the rest of the House a prosperous, positive and happy new year?
	Does my right hon. Friend the Prime Minister agree that if public servants are having a 1% pay rise, it is only fair for those on benefits to be given the same increase?

David Cameron: My hon. Friend is entirely right. These are difficult decisions that we have to make, but they should be made in the context of the fact that over the past five years, benefits have gone up by 20% yet average earnings are up by only 10%. I think it is fair and right to have a 1% cap on out-of-work benefits, a 1% cap on tax credits, and a 1% cap on public sector pay. What is inexplicable is the position of the Labour party which supports a 1% public sector pay cap but wants more for welfare claimants. That is not fair or right and it should think again.

Edward Miliband: Can the Prime Minister tell us why on Monday when he published his mid-term review he failed to publish his audit of coalition broken promises?

David Cameron: We will be publishing absolutely every single audit of every single promise—all 399 pledges set out in the mid-term review. Unlike the Labour party, the audit will be full, frank and completely unvarnished and the right hon. Gentleman will see it this afternoon. Let me perhaps remind him of some of those pledges. We said we would cut the deficit and it is down by 25%; we said we would cut immigration and it is down by 25%; we said we would rebalance the economy and there are 1 million private sector jobs. That is a record to be proud of.

Edward Miliband: I am afraid the Prime Minister will have to do better than that. His adviser said that the Government should not publish the secret audit because it had “problematic areas”, would lead to “unfavourable copy”, and identify “broken pledges”—that is a far cry from the rose garden, isn’t it? The Government said they would
	“throw open the doors…to enable the public to hold politicians…to account.”
	Have another go; it is a simple question. Was it the Prime Minister’s decision not to publish the audit because —and I quote from his adviser—it would “overshadow” favourable coverage?—[ Interruption. ] The Prime Minister should calm down; it is early in the year so calm down. You’ve got difficult times ahead. Was it the Prime Minister’s decision not to publish the audit?

David Cameron: It is my decision that it is being published this afternoon. Is that really the best he can do? He has had a week sitting in the Canary Islands with nothing else to think of. He cannot ask about unemployment because it is falling; he cannot ask about business creation because it is rising; he does not want to talk about the deficit because we have got it down; he cannot ask about welfare because he knows he is on the wrong side of the argument.

Edward Miliband: The only people on the wrong side of the argument are the Prime Minister and the Chancellor, who are trying to divide the country.
	We have not seen the secret audit, but let us see whether we can get a sneak preview of it. The coalition agreement said:
	“We will stop the top-down reorganisations of the NHS”.
	I think we can all agree that that promise has been broken, so can the Prime Minister confirm that it is on the list?

David Cameron: What will be on the list is the 5,000 more doctors and 6,000 fewer managers in the NHS. The right hon. Gentleman talks about wanting to divide the country. The division is this: two parties came together in the national interest to take the difficult decisions, and one party refuses to apologise for the past and to talk about the deficit, and has no economic policy to speak of. That is the division in British politics today.

Edward Miliband: I have to say that if the Prime Minister cannot even admit that he has broken his promise on the top-down reorganisation of the NHS, I do not have high hopes for this secret audit. Let us talk about another broken promise, this time on women. In his usual, modest way, he said:
	“We want to make sexual inequality history.”
	That is a big commitment. He added:
	“That needs a serious commitment…clear policies”
	and clear “leadership”. Will the secret audit therefore acknowledge another broken promise that the tax and benefit changes he is making are hitting women—[ Interruption. ] The part-time Chancellor should calm down a bit too. Will the Prime Minister admit that the tax and benefit changes he is making are hitting women three times as hard as men?

David Cameron: There are more women in work than at any—[ Interruption. ]

Mr Speaker: Order. There is excessive noise in the Chamber. The questions from the Leader of the Opposition must be heard, and the answers from the Prime Minister must be heard.

David Cameron: The Leader of the Opposition will be able to see when the document is published that there are more women in work than at any time in our history; that our pension reforms are helping women; that our public sector pay freeze, which excludes the lowest paid, is helping women; and that we are helping women with extra child care for four, three and two-year-olds. What a contrast between a Government who are prepared to publish every piece of information about every pledge and what has been achieved, and the Labour party, which cannot even apologise for the mess it left this country in.

Edward Miliband: After that answer, it is no wonder the Prime Minister did not take any questions from women journalists at his relaunch press conference.
	Let us turn to the Prime Minister’s biggest broken promise of all. The Chancellor hits hard-working people and the most vulnerable with his strivers’ tax, but at the same time, he is giving—this April—a massive tax cut to millionaires. If the Prime Minister’s audit is to be a candid assessment, will it not have to admit that he has broken that symbolic promise that we are all in this together?

David Cameron: The right hon. Gentleman knows the facts about the top rate of tax. His move to 50p meant that millionaires paid £7 billion less in taxes than they did previously. The fact is that, under this Government, the top rate of tax will be higher in every year than it was in any year under his Government.
	The truth is this. The right hon. Gentleman talks about promises, but let us have a little audit of his promises. He promised us a fully costed deficit reduction programme, but we have had nothing; he promised us proper reforms of welfare, but we have had nothing; and he promised us that he would show how he would have a new policy on tuition fees, but we have had nothing. I have audited all of the Government’s spending programmes and I have identified one where the waste is simply appalling: the £5 million of Short money that goes to the Labour party every year—we get nothing from it.

Edward Miliband: The more the Prime Minister rants and blusters, the less convincing he is. The facts are these: he is cutting the top rate of income tax by an average of £107,000 for everyone earning more than £1 million in Britain at the same time as he is raising taxes on everyone else. What do we know from this week? We know that he is a PR man who cannot even do a relaunch. Halfway through this Parliament, we know that the Government are incompetent, that they break their promises and that the nasty party is back.

David Cameron: It is perfectly clear what has happened since the start of this year. It is this Government who are setting out their plans for the future; it is the right hon. Gentleman’s party that is on the wrong side of the argument on welfare, that has nothing to say about the deficit, and has no credible policy on the economy. He has a shadow Chancellor who he will not back, but cannot sack. Nothing has changed in politics and nothing has changed in Labour.

Stephen Metcalfe: Does my right hon. Friend agree that we should be cutting taxes for hard-working people in Basildon and Thurrock, rather than taking money away from them only to then return their own money through tax credits?

David Cameron: My hon. Friend is entirely right. Of course, he will know that in April every working family will see a £220 tax cut as we lift the tax threshold yet further—everyone will benefit from that. In our view, what we should be doing is cutting people’s taxes, rather than taking more in taxes and recycling them through the massive tax credits business. That is what we believe on the Government Benches, and that is what will work for working families.

John Spellar: Is it not a clear example of how out of touch the Prime Minister is that while the overwhelming majority of the public want to maintain the ban on fox and stag hunting, he actually plans to repeal it? Will he tell us why?

David Cameron: As I explained before Christmas, I have never broken the law and the only little red pests I pursue these days are in this House.

Andrew Selous: Does the Prime Minister accept that under this Government—[ Interruption. ]

Mr Speaker: Order. I am sure the House wishes to hear the words of Mr Andrew Selous.

Andrew Selous: Does the Prime Minister accept that we have brought in an 11% rise to the child element of tax credits, followed by a 5% rise, and that our recent rises build on them, meaning a cash increase of £470 in the child element of tax credits under this Government?

David Cameron: My hon. Friend makes an important point about how we focus help on those most in need. I would also make the point that, because we have lifted the income tax threshold, someone on minimum wage who works full-time will have seen their income tax bill cut in half under this Government. We are on the side of people who want to work hard, get on and provide for their families.

Paul Goggins: There are more than 1 million children living in poverty who do not qualify for a free school meal. Several children’s charities are concerned that that number will increase when universal credit is introduced. Will the Prime Minister take this opportunity to allay their fears by giving a clear guarantee that any child who qualifies for a free school meal under the current rules will keep that entitlement when the rules are changed?

David Cameron: I will look carefully at what the right hon. Gentleman says about free school meals, but let me just make the point that universal credit will extend help to more people and to more families. It will help those people who are only able to work a few hours a week, and help them with child care as well.

Jason McCartney: It was good to see the Prime Minister out running over Christmas, and he is now setting the pace on welfare reform. I have been out training for the London marathon to raise funds for my local Forget Me Not children’s hospice. Will my right hon. Friend join me in praising all those who fundraise and volunteer for local hospices, and reaffirm the Government’s support for such schemes as the capital fund for hospices, for which my local Kirkwood hospice is currently applying?

David Cameron: First, I wish my hon. Friend every good luck for the London marathon—that is far more than I am capable of, I can assure him. We are continuing to support children’s hospices by carrying on with the £10 million funding. In this financial year, we have provided an additional £720,000. We are also making £60 million of capital funding available to adult and children’s hospices. Crucially, in the coalition agreement, a full audit of which will be published later today, we will be demonstrating how we will fulfil our pledge for a per-patient funding system for palliative care, which will help all children’s hospices as they do such important work for our country.

Lucy Powell: Will the Prime Minister confirm that single mum Maggie from my constituency, who works all the hours she can in Tesco but does not earn enough to gain from the new tax allowances, will, after his changes to tax credits and universal credit, be a staggering £1,255 a year worse off?

David Cameron: The point I would make to the hon. Lady is that everybody is affected by these changes. Everyone on tax credits will be affected by the fact that
	there is only a 1% increase. Everyone on out-of-work benefits will be affected by the fact that there is only a 1% increase. The question we have to ask ourselves is this: if we are saving £5 billion through these changes, which I believe are fair, how would Labour fill in this £5 billion black hole? What would it take it off? Would it take it off the NHS? Would it take it off the defence budget? It is time we had some answers from the Labour party.

Michael Crockart: I thank the coalition Government for allocating £10.7 million to Edinburgh’s super-connected city bid. It will revolutionise home and business internet use in parts of my constituency such as Kirkliston and Ratho. Unfortunately, my constituents are immensely frustrated at Edinburgh council’s year-long procurement process. What can the Prime Minister do to help speed up that process?

David Cameron: It is vital that everyone has access to broadband and that increasingly we have that overwhelming access to superfast broadband. I suspect that Edinburgh city council has seen some of the same problems that councils up and down the country have seen with getting state-aid clearance. We now have that clearance for broadband in England, but I am happy to look at the situation in Edinburgh. That has been one of the problems that have been holding back this vital programme.

Meg Hillier: “You shouldn’t have to fill in long forms from the Revenue. You’re working. You need help. We want to help you.” I am sure the Prime Minister recognises his words to families receiving child benefit. How many families could face a fine for not filling out a long tax form?

David Cameron: The point about the child benefit change is that 85% of families who receive child benefit will go on getting it. The question we all have to ask is whether it is right for people earning £20,000 or £30,000 to go on giving child benefit to people earning £70,000, £80,000 or £90,000. We do not believe it is right, but apparently the Labour party thinks it is right to give child benefit to millionaires. We do not think that is a good use of money.

Stephen Phillips: My right hon. Friend the Prime Minister rightly recognises that there needs to be a new relationship between this country and the European Union. He has said—and I agree—that the British people must be offered a “real choice” with regard to our continued membership. I hope that he can confirm to the House today that it is his intention to seek a fresh settlement with the EU and then to seek the consent of the British people to that settlement.

David Cameron: I can confirm that that is exactly what I believe this country should do. It is the right thing for Britain, because it is right that we are involved in the single market and are active players in the EU, but there are changes that we would like in our relationship that would be good for Britain and good for Europe, and because of the changes taking place in the eurozone, which is driving a lot of the change in the European Union, there is every opportunity to achieve that settlement and then seek consent for it.

Chris Evans: A colleague of Lord Marland said:
	“He likes the foreign travel, leading trade delegations, meeting foreign leaders, but wasn’t so keen on the detailed”
	policy of his new job. Hmm, I wonder if the Prime Minister knows anybody else like that.

David Cameron: The hon. Gentleman had all morning to think of that! It is important that we have Ministers in both Houses who are linking up with the fastest-growing countries in the world. That is why our exports to China and India are up 50%. We are connecting Britain with the fastest-growing parts of the world.

Peter Tapsell: Bearing in mind that Bills that might be thought to affect the royal prerogative require the signification of the Queen on Second Reading, will the Prime Minister tell us whether he has yet heard from the palace whether it regards any of the major constitutional changes proposed in the Succession to the Crown Bill as intruding either on the royal prerogative or the coronation oath that Her Majesty took?

David Cameron: Throughout the process of bringing forward this proposal, to which of course the Heads of all the Commonwealth—the dominion realms—have also signed up, there has been very thorough contact between No. 10 Downing street and the palace, and all the issues are settled and agreed.

Alan Whitehead: Hundreds of thousands of householders in high flood-risk areas cannot understand why the Government have effectively abandoned efforts to reach agreement with the British insurance industry on future insurance for their homes and fear that they will not be able to insure their homes after June 2013. Why is the Prime Minister fiddling while the country floods?

David Cameron: I am happy to put the hon. Gentleman right. The discussions are still under way. They have made very good progress. I am confident that we will reach an agreement. As he said, the current agreement does not run out until June this year. I am regularly updated about how those discussions are going. I know from my own constituency, which has been subject to regular flooding, just how important they are. I would also add that we have put in an extra £120 million in flood defences. I think everyone can now see that the flood defence work that has been done over recent years has made a significant difference when we have had high levels of rainfall and very high water in our rivers and streams.

Charlotte Leslie: Can the Prime Minister confirm to the House that disability benefits are being uprated as usual and will not be subject to changes?

David Cameron: My hon. Friend is entirely right. Disability living allowance, which is the key benefit received by people who are disabled, is not subject to the 1% cap. The 1% cap is for in-work benefits. It is very important that we go on paying disability living allowance in the way that we have been.

Teresa Pearce: Can the Prime Minister confirm that my constituent, who is a nurse as well as a single father to his two children, will lose £400 a year as a result of the Chancellor’s cuts to child benefit and other benefits?

David Cameron: The results of the cuts to child benefit are that the best-off 15% of families in this country will no longer receive child benefit at all. That is what is going to happen. That saves around £2 billion a year. Again, Labour has now voted against £83 billion of welfare changes. I am afraid that the Opposition have to start filling in the blanks of where they are going to make up this money. I think it is right that we say to people earning £60,000, £70,000, £80,000 or more, “You shouldn’t be receiving child benefit.” It is not an easy decision, but government is about making decisions; and frankly, opposition is about making some decisions too.

Ian Swales: Can I recommend that the Prime Minister takes a look at Monday’s excellent Back-Bench debate on corporate tax avoidance? Can I ask what he hopes to achieve on this vital issue at the G8?

David Cameron: I will certainly look closely at the debate and read Hansard, because this is not just a vital issue for our country, but one that needs to be settled internationally. That is why I put the issue of corporate tax avoidance at the heart of the G8 this year, and we are also looking very closely at whatever else we can do here in the UK.

Stephen Pound: Further to the question from my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), may I ask the Prime Minister what estimate he has made of the number of families who are still unaware that they are no longer entitled to child benefit, particularly bearing in mind that the bill for the first full year’s charges will come wafting through the nation’s letterboxes in April 1915? [ Interruption . ]Sorry, 2015.

David Cameron: We have written out to 800,000 families. There has been a huge advertising campaign and this has been properly covered right across the media, but I have to say that it is absolutely extraordinary, in a week when Labour is complaining about difficult welfare decisions for people who are in work and people who are out of work, that Labour Members also want to make a priority of opposing taking away child benefit from people earning £100,000 or £150,000. They have really got to start taking some responsible decisions about how we deal with our deficit and get our economy under control.

Nigel Adams: Will the Prime Minister join me in congratulating the business men—the entrepreneurs—and the staff who work at the jobcentre in my constituency, whose efforts over the last two and a half years have ensured that unemployment in Selby and Ainsty is down by a quarter since the last election?

David Cameron: I will certainly join my hon. Friend in that. The people in our jobcentres up and down the country do an excellent job helping people to find work and to make sure that they get all the help
	they need. The fact is that the unemployment rate today is lower than the rate that we inherited at the last election. Over the last year, job creation in Britain was faster than in any other G7 country. We still have a long way to go to rebalance our economy and to get the growth in the private sector that we need, but we are on the right track—1 million new private sector jobs over the last two years, the fastest rate of new business creation for decades. There are good signs that the economy is rebalancing. We need to encourage that by staying on top of our deficit and getting it down, rather than just giving in on every decision, as we have seen today from the Labour party.

Julie Hilling: According to the Children’s Society, up to 40,000 soldiers, 150,000 teachers and 300,000 nurses will lose out as a result of the Prime Minister’s decision to cut tax credits and other benefits. Why are hard-working people like that paying for his economic failure?

David Cameron: The hon. Lady needs to remember why we are having to take these decisions in the first place: it is to deal with the record budget deficit and the mess left by the Labour party. That is the background. The real question about public sector workers—about soldiers, about teachers and about people who work in our public services—is that if they are being restricted to a 1% increase, why on earth does the Labour party think that people on out-of-work benefits should see their incomes go up faster? That is the question that Labour has to answer. We are being fair, because we are restricting the increase on tax credits and restricting the increase on public sector pay, but we are also asking the same of those on out-of-work welfare. What we see as completely unfair is backing the public sector pay increase but wanting welfare to go through the roof. That is completely wrong, it is not fair and Labour must see that it has to change its mind.

Claire Perry: Last week, I visited the T. H. White group in Devizes and heard about its healthy order book and its recruitment plans for 2013. Like many British employers, however, it cannot find enough engineers to hire. Britain’s universities lead the world in teaching science and engineering, yet we have an annual shortfall of 60,000 graduates, and nine out of 10 postgraduate students in those subjects are from overseas. What more can we do to plug that critical skills gap?

David Cameron: My hon. Friend is entirely right; we have to tackle that problem at every level. That means making sure that we are teaching maths and science and other STEM subjects properly in schools. There are signs that the number of people taking those subjects is increasing. We need to ensure that our universities are properly funded; the tuition fees will make sure that that is the case. We also need to raise the profile of engineering, and that is one of the reasons that we introduced the £1 million Queen Elizabeth prize for engineering. That, combined with the 34 university technical colleges, will help to ensure that we train the engineers we need for the future.

Nigel Dodds: It is more important than ever that we seek to continue to move forward and away from violence in Northern Ireland,
	and to create stability. I am sure that the Prime Minister will agree that full participation in and support for the political and democratic process by everyone, so that the politicians can address the people’s issues, is absolutely vital. In that context, and in the light of what is happening in Northern Ireland, will the Prime Minister agree to meet us to discuss the forthcoming legislation on Northern Ireland, so that we can consider measures to increase democratic participation by people in deprived communities, look at the deplorable state of the electoral register in Northern Ireland, which is in a bad state, and deal with the discrimination against elected Members of this House from Northern Ireland who play by the rules while others get money without taking their seats? All of that needs to be addressed.

David Cameron: I would be happy to meet the right hon. Gentleman. Indeed, I have a meeting with a number of members of his party straight after Prime Minister’s questions to discuss the vital issue of ensuring that the military covenant is properly fulfilled in Northern Ireland. He made a number of points in his question. I would throw back part of the challenge to him and his party, just as I would to others in other parties, in saying that we need to build a shared future in Northern Ireland in which we break down the barriers of segregation that have been in place for many years. That is part of the challenge to take away some of the tensions that we have seen in recent days.

Philip Davies: Just in case anybody is in any doubt, will the Prime Minister confirm who he is closest to, politically? Is it Lord Tebbit or the Deputy Prime Minister?

David Cameron: I managed to get through Christmas without spending any time with either of them. I would remind my hon. Friend that I am closer to all Conservatives than I am to anyone from any other party.

Joan Ruddock: Yesterday, the Secretary of State for Health received a report recommending the downgrading of maternity services and the closure of the A and E department at Lewisham hospital. Does the Prime Minister recall the coalition promise to end the forced closures of A and E and maternity services? If this is not to be on the list of broken promises, will he ensure that these closures do not go ahead?

David Cameron: What the Government and I specifically promised was that there should be no closures
	or reorganisations unless they had support from the GP commissioners, unless there was proper public and patient engagement and unless there was an evidence base. Let me be absolutely clear: unlike under the last Government when these closures and changes were imposed in a top-down way, if they do not meet those criteria, they will not happen.

John Baron: The Prime Minister will remember that this House gave the green light to stem cell research some years ago, but we now find that the EU Court of Justice is hindering progress by bringing into question the validity of the patents protecting research. On behalf of the millions of people in this country who suffer from long-term medical conditions, will the Prime Minister do what he can to clear this blockage?

David Cameron: My hon. Friend makes an extremely serious point. I will look closely at it, because I think this country has a competitive advantage from our having taken difficult decisions about stem cell research. It is important that we continue to lead in that area—not only, as my hon. Friend says, for economic and scientific reasons, but because we want to make sure that for people with long-term and debilitating conditions, for children with disabilities and other concerns, we crack those problems for the future. Without that level of research, I do not believe that we shall. I will look very carefully at what my hon. Friend has said and I will write to him with an answer.

Stephen Doughty: Is the Prime Minister proud of the growth of food banks across this country, including in my constituency? Has he visited one, and if not, will he do so?

David Cameron: I am proud of the fact that 1 million more people are in work in this country than there were when this Government came to office, that we have made sure that the lowest paid are not paying income tax and that we have protected the poorest families. I am proud of all those things. Unlike the hon. Gentleman, I do not look down at, or talk down to, people who work hard in our communities to help people.

Several hon. Members: rose —

Mr Speaker: Order.

Transforming Rehabilitation

Chris Grayling: With your permission, Mr Speaker, I would like to make a statement about the rehabilitation of offenders.
	This Government are committed to an ambitious programme of social reform, even at a time of financial constraints. Major changes have already been delivered in welfare and education to tackle the challenge of endemic welfare dependency and educational underperformance, particularly in deprived areas. In the coalition agreement, the Government also promised
	“to introduce a rehabilitation revolution”
	to tackle the unacceptable cycle of reoffending, and today I am publishing a consultation paper entitled “Transforming Rehabilitation: a revolution in the way we manage offenders”. We need a tough but intelligent criminal justice system that both punishes people properly when they break the law and supports them to get their lives back on track so that they do not commit crime again in the future.
	Despite significant increases in Government spending on offender management during the past decade, reoffending remains consistently and unacceptably high. In 2010, nearly half of prisoners were reconvicted within a year of release. This rate is even higher for short-sentenced prisoners, the great majority of whom currently receive little or no support.
	Failing to divert offenders away from crime has a wide impact. The Ministry of Justice alone spent over £4 billion on prisons and offender management in 2011-12, and the wider cost of this failure is considerable. The National Audit Office estimated that the economic cost of reoffending by recent ex-prisoners was as much as £13 billion in 2007-08. I am clear that we cannot continue as before. In difficult economic times, delivering real reform requires a dramatically different approach. We cannot afford not to do this.
	I propose to introduce a new emphasis on life management and mentoring support for offenders in order to address the problems that lead them to turn to crime time and again. For the first time, all offenders will be subject to mandatory supervision and tailored rehabilitation on their release from prison, including those serving sentences of less than 12 months. Those offenders have some of the highest reoffending rates, but there is currently no statutory provision after the halfway point of their sentences. I want to ensure that persistent offenders do not walk out of the prison gates with £46 in their pockets and little or nothing else.
	My vision is very simple. When someone leaves prison, I want them already to have a mentor in place. I want them to be met at the prison gate, to have a place to live sorted out, and to have a package of support set up, be it training, drug treatment or an employability course. I also want them to have someone whom they can turn to as a wise friend as they turn their own lives around. I intend to open up the market for probation services, so that we can combine the expertise that exists in the public sector probation service with the innovation and dynamism of private and voluntary providers.
	These radical reforms are underpinnedbythe principles of the big society. Enabling voluntary sector organisations to participate fully in the transforming of rehabilitation, harnessing their expertise, and making the most of existing local links will be vital to the delivery of the reductions in reoffending that we need to see. Providers will be commissioned to deliver community orders and licence requirements for the majority of offenders, and will be paid by results to reduce reoffending. They will be expected to tackle the causes of reoffending and help offenders to turn their lives around.
	Through the introduction of payment by results, providers from all sectors will have a clear incentive to rehabilitate offenders. We will pay in full only for services that succeed in reducing reoffending. Services will be commissioned nationally, and delivered across broader geographical areas. I am committed to ensuring that the new system continues to make best use of local expertise, and to integrate itself into existing local structures. Potential providers will have to be clear about how they would sustain local partnerships in contracts, and commissioning will be informed by local intelligence.
	Extending rehabilitation to more offenders will introduce new costs to the system, but I believe that they can be balanced by our drawing more providers into the system. Through increased use of competition, we can generate efficiency savings and drive down unit costs across the system, allowing our funding to go further.
	The public sector probation service does an important job in protecting the public. The Government are very clear about the value and expertise that it brings, and we want to continue to use that expertise as we transform our approach to rehabilitation. There will be a continuing critical role for the public sector, which will include advising the courts and assessing the risk that an offender poses to the public. Offenders who pose the highest risk of serious harm to the public will continue to be managed directly by the public sector, and the public sector will retain ultimate responsibility for public protection.
	Transforming rehabilitation will help to ensure that all who are given prison or community sentences are properly punished, while also being helped to turn their back on crime for good. That will mean lower crime rates, fewer victims and safer communities. I commend my statement to the House.

Sadiq Khan: I thank the Justice Secretary for giving me advance sight of his statement.
	It is universally agreed that we need to do more to reduce reoffending. Preventing offenders from going on to commit more crimes and create more innocent victims should be a priority for us all. Our probation service is the Cinderella of our criminal justice system. It has a low public profile, but is staffed by dedicated professionals who help keep our communities safe. In 2011 it was awarded the British Quality Foundation’s gold medal for excellence, and the performance of every single probation trust was rated by the present Government as either good or exceptional. The service has done all that the Government have asked it to do.
	Let me begin by asking the Justice Secretary what he means by saying that he wants to professionalise the probation service. The probation service has been working in partnership with the private sector and voluntary
	groups for some time now, and I am sure the Justice Secretary will have seen some of the excellent work being done in partnership around the country from Avon and Somerset to Doncaster, and from Peterborough to Manchester. There is a place for all in our justice system, bringing in outside experience and innovation, and working together in partnership to reduce reoffending.
	It is always worth looking for new ways to address the serious problem of reoffending, and that was the motivation behind the pilot that the last Labour Government began in Peterborough, which is a payment by results model. I suspect it is also why the Justice Secretary’s predecessor launched two PBR pilots in probation trusts. It is right to test and try out properly any fundamentally new way of working, and there is no history in criminal justice of payment by results. The Justice Secretary has chosen to cancel the two probation PBR pilots set up by his predecessor. Can he explain why? Did he do so because he has already made up his mind that PBR works, despite there being no evidence at present to support that view?
	We know, however, from where PBR has been used in the provision of other public services—the Work programme—that it has failed to hit its targets, and the Justice Secretary knows all about that programme, of course. Out of 800,000 people who started the Work programme, only 3.5% were still in work after six months, and not a single provider hit the target. That is bad enough in the context of the Work programme, with people not getting jobs or failing to keep jobs, but in the context of criminal justice, failure could lead to offenders walking the streets without the necessary supervision and support, with the risk that poses to public safety. We are also seeing in respect of the Work programme that it is not the small and local charities that are delivering. They have been crowded out by the big multinationals such as G4S and A4e. How will the Justice Secretary ensure that that pattern is not repeated in probation services? The Justice Secretary is proposing that only low and medium-risk offenders will be dealt with by private companies, but can he confirm that medium-risk offenders include those who have committed burglary and violent crimes, including domestic violence?
	One in four offenders’ risk levels fluctuate during their time on licence. How will the Justice Secretary ensure the PBR model will be able to take that into account? In that regard, how does he propose the police should share their sensitive information about offenders under their supervision with the private sector?
	The Justice Secretary has also announced a 25% expansion in the number of offenders who will be subjected to mandatory supervision, at a time when his budget is shrinking by 25%. Is it not therefore inevitable that resources will have to be stretched ever more thinly to cover that increase in offenders, and can he assure the House that high and medium-risk offenders will get the appropriate supervision and support?
	We are willing to work with the Government to reduce reoffending. We will carefully consider the Justice Secretary’s consultation document and the answers he gives in the House this afternoon, and we hope that the detail given will provide greater reassurance than his statements have so far.

Chris Grayling: I am grateful to the shadow Justice Secretary, the right hon. Member for Tooting (Sadiq Khan), for the elements of his statement that were supportive of what we are doing, and of course I should thank the Labour party, because it is only thanks to legislation introduced by the Labour Government prior to 2010 that I am able to make such an important reform for this country. I should also pay tribute to the former Lord Chancellor, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), who established the Peterborough pilot. The work being done in Peterborough prison by the team involving the St Giles Trust—I met representatives from the trust this morning—and other charities working in partnership with the private sector is an impressive example of what can be done in mentoring offenders.
	The right hon. Gentleman mentioned pilots. The last Government were obsessed with pilots. Sometimes those in government just have to believe in something and do it, but the last Government set out a pilot timetable under which it would have taken about eight years to get from the beginning of the process to the point of evaluation and then beyond. Sometimes we just have to believe something is right and do it, and I assure Members that if they went to Peterborough to see what is being done there, they would think it was the right thing to do.
	The right hon. Gentleman mentioned the Work programme, and I wish he would stop using statistics that are certainly not entirely—[Interruption.] I am not sure how to describe them; “misleading” might be inappropriate language to use. The Opposition keep missing an important point: in the Work programme, we do not pay until someone has been in work for more than six months. So if 800,000 people joined the Work programme in the first year, half of them could not have been in work for six months. The reality is that the Work programme has so far helped 200,000 people find jobs. Many of those people have been in jobs for the short term and have then gone on to second jobs, and many of them have gone into long-term employment. The programme is making a real difference, and I defy any Member of the House to visit a Work programme centre, see the work that is being done and not come away impressed. [Interruption.]The right hon. Gentleman mentions G4S from a sedentary position. It is true that G4S is one of the prime contractors in the Work programme, but interestingly, it subcontracts all its work in the Work programme to voluntary sector organisations and small businesses. The Work programme is the biggest voluntary sector welfare-to-work programme that this country has ever seen, with organisations such as the Papworth Trust delivering support right across East Anglia and organisations such as the Careers Development Group involved. That charitable organisation is running large parts of the Work programme in London. Labour Members need to look at the detail of what is happening.
	The right hon. Gentleman made a sensible point and asked a sensible question about the management of and fluctuation in risk. We intend the public probation service to work closely with local providers, and where there is a variation in risk—where it suddenly becomes clear that an individual represents a clear and present danger of harm to the public—the mechanisms will exist to move those people back under the public sector
	umbrella. So the public sector will continue to work with the most serious offenders, through the multi-agency public protection arrangements and similar, and the police will continue to work closely with the public sector on the most serious offenders. Where there is a clear and present risk to the public, it is the duty of the public probation service and of this Government—and it will continue to be so—to make sure that we supervise and manage that risk, and that intelligence is shared between the police and the public probation service to manage the risk that exists, when it does exist, because we must ensure that the public are protected.
	The right hon. Gentleman raised the question of cost, and I simply offer him one example of where efficiencies can be delivered. When we contracted out the delivery of community sentences in London, the cost of delivering those sentences fell by nearly 40%. I am absolutely certain that although very good work is being and will continue to be done in the probation service, and those professionals will continue to work in this field, there are efficiencies to be found. Such efficiencies can be reinvested in providing support to those prisoners whose sentence is less than 12 months, who have never had it before.
	Lastly, the right hon. Gentleman asked about the more difficult offenders. I wish to make it absolutely clear, as our consultation document does, that we will have a pricing mechanism that makes it impossible for providers simply not to support the most difficult prisoners. Every prisoner must have support. We are delivering support that is mandated by the courts for every prisoner, and that will be continued.

Crispin Blunt: These proposals, which will greatly increase the potential for offender managers to deliver rehabilitation, should mean that probation officers will be employed by many different types of organisation. Indeed, it will be vital for the success of these reforms that probation officers at all levels of experience are found in the remaining public sector organisations and in the new delivery organisations. Will the Secretary of State therefore ensure that he strengthens the corporate identity, and the training and academic underpinning of probation as a profession, so that there is a strong base for our excellent probation officers and their profession, wherever they are deployed?

Chris Grayling: I start by paying tribute to my hon. Friend. There is a slight myth in the media that we arrived in September and nothing had been done before, but that is totally untrue; I have inherited some very good work done by him and his colleagues, which created the foundation for these reforms. Indeed, he and I worked closely together in providing employment support to prisoners through the Work programme. It is very important that we ensure that we have the best possible professional standards. I apologise here, because the point was raised by the right hon. Member for Tooting (Sadiq Khan). One of the questions I have for the probation profession is: should we facilitate the creation of some sort of chartered institute that raises professional standards in the profession? It will continue to be an important profession, with high-level specialist skills needed to manage the most serious risk. I am also ensuring, through these proposals, that existing probation staff have the opportunity to set up social enterprises and mutuals, so that they themselves have the opportunity to be part of the future.

David Hanson: There is nothing intrinsically wrong with working with the private and voluntary sectors in the justice system; I did it when I was the Justice Minister. I have two questions to put to the Secretary of State, if I may. First, on resilience, how does he know that the organisations with these contracts, like G4S in the Olympics, will be able to deliver? Secondly, on accountability, things will go wrong in the justice system, cases will be disastrous and things will be serious. Who will ultimately be accountable to this House and to the public for the errors and mistakes?

Chris Grayling: The simple answer to the latter point is that responsibility will continue to lie with the public probation service and, ultimately, the Secretary of State. The right hon. Gentleman and I know that in any system with a rate of reoffending there will be further crimes, whether a public, private or voluntary sector provider does the work. I want to ensure that the level of reoffending continues to go down and that we try every means at our disposal. The payment by results regime opens the way to innovation to ensure that we do the best possible job in ensuring that people do not reoffend.

Alan Beith: Although I understand the Secretary of State’s enthusiasm for getting on with the job without waiting for more pilots, a decision that some of his advisers might have called courageous, may I ask him to pay particular personal attention to ensuring that charities and voluntary organisations with a track record are not crowded out by how contracts are let? Will he also consider whether he should expand the role of the chief inspector of probation so that quality control over the whole of the provision is maintained?

Chris Grayling: The latter point is an important one and I rather agree with my right hon. Friend on that. I look forward to having discussions with him and his Committee about it. I am also strongly supportive of the voluntary sector. It is simply not the case, even though the Opposition keep saying that it is, that the voluntary sector is not involved in the Work programme. That programme supports well over 100,000 people in the voluntary sector, using the real expertise of small and larger organisations such as the Papworth Trust and the Salvation Army. I want to see more of that in this process.

Paul Goggins: May I ask the Secretary of State about accountability to the courts? When a medium or low-risk offender is on a programme run by a private company and fails to keep to the conditions of that order, who will make the decision to return that offender to the court? Will it be the private company, which clearly has an interest in a successful outcome to the programme, or will it be a probation officer?

Chris Grayling: It will be a probation officer. I expect to have in every centre a seconded or attached probation officer who will be responsible for enforcing the legal side of things. In much the same way as happens in the Work programme, where Jobcentre Plus does the sanctioning, it will be a contractual duty of providers to report a breach but it will be the job of the public probation service to decide how to respond and whether to refer it to court or do something else.

Fiona Bruce: I thank the Secretary of State for his statement, which I welcome. Does he agree that the most effective support for former prisoners can be given by those with whom they have developed a relationship of trust—a relationship that has been developed not just over the days or weeks prior to release but over a longer period of time—and that that is particularly the case for young offenders? In light of that, will he consider how support can be given to the excellent restorative justice work done with young men by the Sycamore Tree project at Thorn Cross young offenders institution in Cheshire?

Chris Grayling: Absolutely. I look forward to visiting Thorn Cross at some point. I visited some years ago when, as my hon. Friend knows, I was the candidate in Warrington South. It is a very good centre and I look forward to visiting again in the not-too-distant future. I absolutely believe that the role of such local projects is very important. I am often asked why crime is coming down. I think that one of the reasons is that all around the country real efforts are being made by the voluntary sector and the community sector to engage with young people who might otherwise re-engage with or embark on a life of crime.

Hazel Blears: My right hon. Friend the Member for Wythenshawe and Sale East (Paul Goggins) and I recently had the opportunity to visit the probation service in Greater Manchester, where we saw the programme to deal with some of the most dangerous individuals—that is, people who had been convicted of terrorist offences who will be released over the next few years. The work being done to reintegrate them into the community and to de-radicalise them—very specialised work indeed—was first rate and very professional. Will the Secretary of State reassure us that in the case of such prisoners—ex-terrorist offenders—the community will be kept safe and that vital reintegration and de-radicalisation work will continue?

Chris Grayling: I can absolutely do that. I envisage no change, unless it is an improvement, to how we manage offenders such as former terrorists in the community. They would fall under the high-risk umbrella and I would expect that work to continue in the public sector, where it takes place at the moment. I pay tribute to Greater Manchester probation trust, which is among the most innovative and entrepreneurial of the probation trusts. I have little doubt that some of the people in that trust will see the opportunity to create a mutual or co-operative. In the spirit of the Labour party and the co-operative movement, this is a great opportunity for a new generation of co-operatives to emerge and I want to see staff participating in the future.

Henry Bellingham: Does the Secretary of State agree that it is difficult and challenging to rehabilitate hardened drug addicts? Does he share my concern that many young people are going into prison as mild drug users but coming out as addicts? Why are there still so many drugs available in our prisons and what is he doing about it?

Chris Grayling: That is a concern that I and the Prisons Minister, the Under-Secretary of State for Justice, my hon. Friend the Member for Kenilworth and Southam
	(Jeremy Wright), share. We have done quite a bit of work on it already, but we are up against a determined effort to get drugs into prison; some of the means used to smuggle drugs into prison are quite eye-catching. We will do everything we can to reduce the availability of drugs in prisons, but when someone comes out, if they have had some form of rehabilitation in prison I want to see that continue in the community. The structure of these reforms and the through-the-gate approach will make it much more likely that we have consistent rehabilitation through prison and beyond.

Keith Vaz: The last report of the Select Committee on Home Affairs, entitled, “Drugs: Breaking the Cycle”, pointed out that 35% of those coming out of prisons had a drugs problem. I support the principle of what the Secretary of State has said today, but will he be able to choose the expertise in dealing with drugs of those organisations that will help with his rehabilitation revolution? Not just any organisation can deal with drugs; those people must be experienced in helping people once they have come out of prison.

Chris Grayling: That is why not just any organisation with cash in the bank will be able to come in and win the contracts. I want to see expertise and understanding of how to bring in the different services that are available. They should be able to bring in the drug rehabilitation services funded by the Department of Health and deal with the local college, ensuring that prisoners are on training courses. The people who do this work must have a joined-up understanding of what needs to be done, otherwise we would not work with them.

James Clappison: I warmly welcome my right hon. Friend’s statement. Will he give me an assurance that those who will now be responsible for rehabilitation will give high priority to getting prisoners working while they are serving their sentences and into jobs when they have completed their sentences?

Chris Grayling: I intend to continue the work done by my predecessor, the right hon. and learned Member for Rushcliffe (Mr Clarke), on increasing the amount of work done in prisons. He has done good work in extending that already and it is particularly important that that work continues after prison. That was why my hon. Friend the Member for Reigate (Mr Blunt) and I worked hard to ensure that prisoners who came out of jail entered the Work programme on day one and started to get back-to-work support straight away. I want to see an integration of support that not only delivers the life management and mentoring I have discussed today but ensures that we provide proper back-to-work support for offenders alongside that, as that is the best way of stopping them from reoffending.

Elfyn Llwyd: During his statement, the Secretary of State said that sometimes we must believe that something will work rather than having a pilot. That same Secretary of State believes that we should drastically increase electronic tagging, despite his own impact assessment saying that that will have no impact on reoffending. Should we take the consultation seriously?

Chris Grayling: I would simply invite the right hon. Gentleman to visit his own probation trust in Wales, which is one of the trusts trialling GPS tagging. I can see real benefits in that tagging. We are considering it and we are recontracting tagging contacts at the moment. I think that GPS tagging offers a new dimension for our community justice system that will help sometimes to protect offenders and sometimes to deal with offenders who are doing things that they should not be doing.

Julian Huppert: Does the Justice Secretary agree that it is simply astonishing that there has not been rehabilitation support for the roughly 50,000 a year whose sentences are less than 12 months? They have a reoffending rate of about 60% and I congratulate him on the fact that this Government will finally address the issue, helping them back into society and reducing reoffending.

Chris Grayling: I am grateful to my hon. Friend for his comments. It is baffling that over all the years of plenty for which Labour was in power, this is something Labour never did. We have an extraordinary situation with thousands and thousands of offenders who leave prison with £46 in their pocket and nothing else, and with no support, and a huge proportion of them reoffend. I am determined to change that.

Diana Johnson: The Government talk a lot about evidence-based policy making. Will the Secretary of State tell me why we are not having pilots to see whether the reform will work?

Chris Grayling: I simply invite the hon. Lady to look at the work done in Peterborough and by voluntary sector organisations to mentor offenders. Sometimes when we look at something, we can say, “That is the right thing to do.” That is what we are doing.

Andrew Griffiths: I welcome the Secretary of State’s commitment to drug treatment. Does he share my concern that, in the past 10 years, there has been a 165% increase in methadone maintenance prescriptions in prisons but a 30% reduction in detoxification procedures? Will he commit today to making rehabilitation and recovery a key and central part of his plans?

Chris Grayling: I absolutely give that commitment. One problem has been that if prisoners who are in prison for a short time have no support after they leave, all prisons can do while they are inside is to stabilise the situation. When there is through-the-gate rehabilitation, with somebody waiting to ensure that rehab continues in the community, we have a much better chance of addressing the issues to which my hon. Friend refers.

John McDonnell: The probation service is staffed by highly qualified, professional, extremely dedicated and hard-working people. Medium-risk cases can be complex and serious in their consequences. The public will be concerned that the same levels of qualification and professionalism should apply to supervision. Will the Secretary of State ensure that the same level of qualifications and experience will apply to probation officers in the voluntary and private sectors?

Chris Grayling: I do not think that the hon. Gentleman quite understands what we are trying to achieve. We need the qualifications and experience to protect the public from harm, but in my view the former offender turned good—the former gang member gone straight—is the best way of making sure that a young person coming out of jail does not go back to the same ways. This is about getting a mix of high qualifications, of the kind we find in our public probation service, in people who have turned away from crime and who are helping those who might end up in a place where they once were.

Harriett Baldwin: I draw the House’s attention to my historic interest in social investment.
	I welcome the opportunity for charities and social enterprises to get more involved in this area. Payment by results is very hard on working capital. Will the Secretary of State outline what his Department is doing to increase access to finance for charities and social enterprises—for example, the nascent social impact bond sector?

Chris Grayling: Let me start by saying that I do not expect this to be a 100% payment-by-results contract. There is a need to enforce orders of the court, so I do not expect to be able to put 100% of the fees that we pay on a payment-by-results outcome basis. However, I do want providers to be at risk; I want them to have their money on the table to deliver excellence for us, but I absolutely accept my hon. Friend’s point. That approach will make the cash flow situation less challenging than it would be in a 100% situation.
	I have already held and will continue to hold meetings with people in the social investment sector to encourage them to look at the measure as a real opportunity. This is the kind of area in which social investment in this country should be involved. There is a clear public benefit and the possibility of earning a return. I absolutely hope and believe that our social investment sector will row in behind it.

Gregory Campbell: The Secretary of State was explicit in saying that we could not afford not to do this. Can he be equally explicit about the primary focus of the consultation exercise? Is the measure about a reduction in reoffending or a reduction in expenditure?

Chris Grayling: This is absolutely about a reduction in reoffending. I have believed for a while that we should carry out this measure. I was particularly pleased when the Prime Minister invited me to take my current position. I absolutely believe that I should try to lead with the reform, and the Prime Minister is absolutely behind it. As the hon. Gentleman will know, in some parts of the United Kingdom, such matters are devolved; I hope that we are setting an example that others will choose to follow.

David Burrowes: I thank my right hon. Friend for fulfilling another manifesto promise in this rehabilitation revolution. Will we be following the great model of the National Grid young offender programme, which moves people into work? Its reoffending rates are in single digits, in contrast to
	the unacceptable rates nationally. Can we follow through with that model and replicate it across the country, so that we have a conveyer belt not into crime but into employment?

Chris Grayling: I pay tribute to the work done not only by National Grid but many other companies in this area. I have visited the Timpson’s workshop, which involves the father of the Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson). It is a first-class facility in Liverpool jail of the kind that I would like to see more of. The more that we can engage the private sector in helping offenders make the transition from prison into employment, the better. I pay tribute to all those organisations, and particularly National Grid.

Graham Allen: I strongly welcome the Secretary of State’s decision to look at the gap between a person leaving through the prison gate and finally being picked up by the authorities, and to close that gap; it is a key vulnerability when it comes to reoffending. Will he also look downstream at creating programmes that will help social and emotional capability to be developed within prisons before people are released? As he has converted to co-operatives, will he extend the Whitehall co-operative to health and education, so that offending behaviours are addressed way earlier and potential offenders do not go to prison in the first place?

Chris Grayling: The latter point is important, and I give the hon. Gentleman that assurance. I pay tribute to his work in establishing the Early Intervention Foundation. The way in which he works across the House is a good example of Parliament setting aside politics and coming together in the interests of the country. I assure him that we will continue to look for different ways of working.
	I see social challenges as a jigsaw puzzle. We are reforming welfare and education, and we have the troubled families programme and an increased focus on early intervention. Today I am trying to put in another piece of that jigsaw. The hon. Gentleman and I know that the problems will not be solved overnight, but if we do not move things in the right direction, we will never solve them. I hope and believe that the measure is one part of doing that.

Peter Bone: Following on from the question asked by the hon. Member for Nottingham North (Mr Allen), we should change the attitude towards reoffending while offenders are in prison. Should we not have modern and efficient prisons rather than Victorian ones? Would it not be a good idea to reopen Wellingborough prison—a modern prison and the third cheapest in the country to run?

Chris Grayling: I congratulate my hon. Friend on continuing to be a first-rate advocate for his constituency. He knows that my strategy is to modernise the prison estate as fast as resources allow; it is clearly both cheaper and better if prisoners are in more modern prisons. I will have more to say about that as time goes by. We have had extensive discussions about Wellingborough prison and its site. My answer is never say never, but he will know the nature of the challenges that we face and how we are trying to address them.

Gerry Sutcliffe: One of the busiest places in prison is the gym. I hope that the Secretary of State will look at how sports can help to reduce reoffending. Will he look at the boxing project in Doncaster prison? It teaches offenders to get involved in boxing and uses boxing coaches. Unfortunately, it has had to be stopped because of a change in the guidelines on boxing in prisons. I understand some of the problems, but the scheme is great and people get jobs at the end of the course.

Chris Grayling: I can give an assurance to the hon. Gentleman. I am aware of the project to which he refers. I have seen a number of projects around the country in which boxing is used as a way of engaging young people. I have no problem with that happening in our prisons. My hon. Friend the Under-Secretary of State for Justice, the hon. Member for Kenilworth and Southam (Jeremy Wright), who is responsible for prisons, is writing to the hon. Gentleman to say that we are happy for the project to go ahead; our only caveat relates to violent offenders. We are happy to see the project continue as a way of engaging non-violent offenders.

Sarah Wollaston: I warmly congratulate the Justice Secretary on having the vision to have every offender met at the prison gates with somewhere to live and a proper package of support. There was certainly a pilot under the last Government—giving offenders £46 and little else. We have seen where that ended up.
	Will the Secretary of State outline the number of offenders who have problems with alcohol? Will he reassure me that alcohol will be given the same priority as drugs as offenders leave prison?

Chris Grayling: About three quarters of prisoners have an addiction problem, a mental health problem or both. About half of prisoners have had some form of addiction problem. That is a real challenge, which colleagues at the Home Office are looking at closely as well. There are new mechanisms to monitor and help and support those with alcohol problems. I accept that it is a real issue, which I hope and expect mentors working with prisoners to address if they work with people with an addiction challenge.

Barry Sheerman: I congratulate the Secretary of State on the consultation. As one who in a previous life spent four years as Roy Hattersley’s deputy working on our party’s policy in this area, I can say that most Governments have failed to get the issue right. However, I did learn at that time that we must pay careful attention to how many people we put in prison and what we do with people in prison—education and skills training is still absolutely pathetic. Lastly, when a prisoner comes out, he needs the full package of support—housing, education, a job and everything else. Highly skilled people are needed to help make that happen.

Chris Grayling: I absolutely agree. We are doing this through a consultation document rather than simply arriving with a final blueprint—I am setting a direction of travel but I am not saying that every detail is finalised—to offer people in this House and outside an opportunity to say, “You want to do that, but if you tweak this a bit
	it might be better.” I hope that over the next two or three months we can look at that feedback, digest it, and help to hone the final package in a way that gives us the maximum opportunity of working with and using the expertise of people such as the hon. Gentleman who have been here and done this.

Several hon. Members: rose —

Mr Speaker: Order. I am keen to accommodate the extensive interest in this important statement, but I remind the House that this is an Opposition day with significantly subscribed debates to follow. Therefore, if I am to succeed in my mission to accommodate colleagues I require their help in the form of succinct questions, an object lesson in which will now be provided, I feel sure, by Mr Philip Davies.

Philip Davies: I warmly support the thrust of my right hon. Friend’s proposals, but the thorny issue is about what constitutes a successful outcome on payment by results. I have met people in the probation service who think that reducing reoffending from 10 burglaries a month to two is a success. Will my right hon. Friend assure me that that will not be considered a success and that only no reoffending will be considered a successful outcome?

Chris Grayling: I can give my hon. Friend an assurance that I will not be rewarding people for someone burgling a few houses rather than a lot of houses.

Helen Goodman: The moment at which the probation service has been commended for its effective performance is an odd one for the Secretary of State to choose to put his foot on the accelerator. What is his estimate of the number of probation officers who will be made redundant, what is the anticipated cost of that, and does he have an agreed budget for it from the Treasury?

Chris Grayling: I do not expect this to lead to wholesale redundancies in the probation service. It certainly means a new world for many people in the probation service in being part of the new organisations, new social enterprises and new consortia that will deliver the services. Yes, of course there will be some changes, but this does not involve, suddenly and instantly, mass redundancies in the probation service—that would not be right.

Philip Hollobone: Of the 50,000 prisoners on short-term sentences who are released each year, a growing proportion are EU and other foreign nationals. These people do not deserve rehabilitation; they deserve deportation. Will my right hon. Friend dig deep within the security provisions of the EU free movement directive to ensure that if any EU national commits an imprisonable offence in this country, of whatever sentence length, they are deported on release and barred from returning to this country?

Chris Grayling: I agree with every single word that my hon. Friend said. We have far too many foreign national prisoners in our jails. The challenge of returning them, of course, is that there has to be somebody willing to take them at the other end—I am not willing simply to release criminals on to the streets. I absolutely agree
	that we need to be able to return prisoners as quickly as possible. I intend to do everything I can to use the prisoner transfer agreement, which more and more countries are now ratifying, as much as possible to return offenders to other countries, and to do everything I can, with my hon. Friends in the Home Office, to make sure that they do not come back.

Ian Lucas: The practical effect of the Work programme in Wrexham is that local charitable organisations have been excluded from providing services, and some of them have closed. Will the Secretary of State impose a contractual condition that local charitable organisations should be involved in the provision of services for the new scheme?

Chris Grayling: It depends on what works. There are very good charities delivering excellent services for this country. There are charities that do good and noble work but are less good at the jobs they do. What matters to me is that we have the organisations that do the best job. In the Work programme we will find excellent organisations in the charitable sector doing first-rate work and excellent private organisations doing first-rate work, and I would like to have the best of both.

Paul Maynard: I strongly welcome what the Secretary of State has said. Will he look not only at the amount of money that prisoners get on release but the monetary form in which it is given to them? I am concerned that many prisoners are given the money in cash form and go immediately to the nearest town to use it to purchase inappropriate goods such as alcohol that damage the essential stability of their first 48 hours post-release when they need to set a good pattern of behaviour.

Chris Grayling: Absolutely. Another problem in the system was that up until a few months ago prisoners could not even sign on for benefits for a week after release, which left a huge hole in their finances and caused a lot of reoffending. I addressed that when I was a Minister in the Department for Work and Pensions. We have to make sure that the environment is right when prisoners are released. If they are met by a mentor at the gate who then sorts out their lives, showing them where they are going to live and making sure that they are signed on to benefits, I hope that their time to go down the pub will be much diminished.

Nicholas Dakin: Changing human behaviour is a complex business, and I have been very impressed by the work going on across agencies in the Scunthorpe area to reduce reoffending, particularly when it is related to alcohol and drugs misuse. Changing what is going on puts at risk those sorts of activities. Why is the Secretary of State allowing only six weeks for this consultation when it is so important to get it right?

Chris Grayling: This is an iterative process. We have a formal consultation period of six weeks. We carried out a consultation on the future of probation last year, and this is an updated consultation. We are going to carry on listening to Members across the House. It will take us a few more months to hone and finalise our final package, and we will look at what works. If the best idea
	comes in half an hour before we finalise it, then that is fine. I want to make sure that what we have is what works.

Tessa Munt: While I recognise that the Secretary of State’s proposals seek to ensure that ex-prisoners make a success of their lives once they are released, I want to return to the matter of those who enter prison with a drug problem. Has he managed to call a complete halt to the practice of retoxifying prisoners prior to release when the Prison Service has taken the trouble to detoxify them at the beginning of their sentences?

Chris Grayling: We will do everything we can to do that. The Under-Secretary of State, my hon. Friend the Member for Kenilworth and Southam, is looking very hard at the whole issue of how we manage drugs in prisons and the nature of such rehabilitation. As a result of these reforms, I hope that we will end up not only dealing with the question of retoxification but identifying problems, starting rehab in prison and continuing it post-prison, and getting prisoners off drugs altogether.

Luciana Berger: Some parallels have been drawn between this plan and the Work programme. One of the problems with the Work programme is that minimal information is available from some of the private providers, and they are not subject to freedom of information requests. How will this be different?

Chris Grayling: I am working on reforms to FOI at the moment. We will try to be as transparent as possible. The hon. Lady has to remember, although she is not guilty of this, that over the past couple of years I have been regularly attacked by Labour Members about the use of national statistics. They cannot have it both ways. They cannot demand the information in advance and then want me to conform to national statistics rules. We will publish data as soon as we are able to do so, under the guidance of our statisticians, and we will be as transparent as possible over all this.

Robin Walker: In welcoming this statement, may I ask the Secretary of State to expand on one aspect of it? He said, “Services will be commissioned nationally”, but he also said that he is committed to ensuring that the new system will make the best use of local expertise. In an area such as West Mercia, where our probation service has a strong record of working with the voluntary sector, how can we ensure that the existing relationships are expanded and improved on rather than discarded and replaced?

Chris Grayling: One of the things I intend to write into the tender documents when the time comes is a requirement for the bidder to demonstrate that they are capable of maintaining and developing these local partnerships, which are crucial. In an area such as integrated offender management, for example, it is essential to maintain those close links. The point made in the document is that it is not practical to commission a contract of this kind on a fragmented basis. Trying to have 15, 20 or 30 small payment-by-results contracts
	around the country, locally commissioned, would be unbelievably complex and take an inordinate amount of time to administer, and the expertise is not really there to deliver that. We will commission nationally but the delivery will be as local as possible.

Chris Williamson: This statement seems to be driven more by extremist right-wing ideology than by any empirical evidence, because the Secretary of State acknowledged that the public sector is best placed to deliver public safety. Is he planning to allow the police to share intelligence with G4S and other private providers?

Chris Grayling: I know that the Labour party is going through an identity crisis at the moment, and the hon. Gentleman may be in the wrong party, but if I am not mistaken the Peterborough pilot was started by Labour and the legislation that allows me to do this was passed by Labour, so does he support what his party did, or not?

Jeremy Lefroy: I welcome the extension of rehabilitation to more offenders. As my right hon. Friend rightly said, a place to live on release is vital. Will capital funding be available to assist in the development of such, sometimes specialist, housing?

Chris Grayling: This is an important issue that was raised with me this morning by the probation trust chairs. Of course, we provide a number of specialist accommodation blocks already. As part of the work we do over the next two or three months, we need to look at exactly how we ensure that the right vehicles are available to address accommodation needs. I want to see what I saw this morning at St Giles Trust, which has a small team of professionals who are very good at finding young people who are out of prison somewhere to live and stabilising their lives.

Nick Smith: I want to press the Justice Secretary on something. On his watch, the Government have cancelled the probation service’s payment-by-results pilots before we have heard the evidence. Is not risk to the public increased when we do not have the results of those pilots?

Chris Grayling: I sat through a decade in opposition watching the previous Government so often piloting something, with nothing ever happening. The number of pilots that the Labour Government went through in office was endless. There is something in the work that is being done in Peterborough and the voluntary sector that I want to capture now, not in a decade’s time.

Henry Smith: In my constituency, Royal British Legion Industries is doing a great job in getting people back into employment through the Work programme. Does the Secretary of State envisage organisations such as RBLI helping, in particular, ex-service personnel who are former offenders to be rehabilitated?

Chris Grayling: I absolutely hope that RBLI will be one of the organisations that will come forward. It is an example of practical delivery of the Work programme by the voluntary sector on the ground, contrary to what we sometimes hear. There is a particular challenge in
	dealing with the number of ex-service people in our prisons. The more expertise we can bring to bear on that, the better.

Bill Esterson: The Secretary of State mentioned in passing the importance of mental health in prison and the number of prisoners who suffer from mental health problems. I am sure that he understands the need for significant support, both in prison and after, in reducing reoffending among that group. Will he confirm that counselling and other services for those with mental health problems will get the priority they need, both in prison and after, as a result of these changes?

Chris Grayling: The support in prisons for mental health is substantially provided by the national health service. We have to make sure that what starts in prison carries on after prison, but one of the flaws in the current system is that it does not work very well in that respect. I hope that, by creating a service that is much more through the gate and by addressing the life-management of offenders as they move through prison and afterwards, there will be continuity in the delivery of those services and that a mentor will look three months ahead and say, “Prisoner X is coming out and needs to carry on with their counselling service. I will make sure that happens.”

Rehman Chishti: The Secretary of State will be aware that in 2010 and 2012 only 56% of those on drug treatment and testing orders completed them. Will he clarify and confirm what further steps will be taken to ensure that those who are on such orders fully complete them?

Chris Grayling: I intend to legislate in the near future to ensure that, when we do this, the court has the power to require people who have short sentences to go through rehabilitation programmes. It is important that we have a system whereby if someone who has a drug problem has a short sentence and is released from jail having started rehab there, that rehab will carry on and they will be required to do it. That will be the case.

Kate Green: The Justice Secretary will be well aware of the special experiences and needs of women in the criminal justice system. There are already some excellent programmes supporting women offenders, such as the women matter programme in Greater Manchester. Will the Justice Secretary assure me that he will use the consultation period to reflect carefully on how a payment-by-results method will need to be adapted to meet the particular needs of women offenders?

Chris Grayling: I can give the hon. Lady that assurance. The Under-Secretary of State for Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), who has responsibility for women in prisons, and I are looking at the issue. There are different challenges for adult males, young people and women in prisons, and we need to be careful and ensure that we approach each of those groups with an appropriate understanding of the different circumstances in which they find themselves.

Steve Brine: The Justice Secretary has rightly said that the failure to divert people away from crime is having a wide impact and he has mentioned
	life management. Will he confirm that he recognises that the transformative impact that we could have includes focusing on early years work at primary school, and even before that, with professionals such as speech and language therapists and, probably even more importantly, good parenting specialists?

Chris Grayling: I absolutely accept that. That is why I said that I see meeting the social challenge we face as a jigsaw puzzle. Different pieces, whether they be intervention to work with troubled families, health visitors in the home, guidance for young lone parents or helping offenders who are long-term unemployed, are all part of a broad-ranging challenge that I believe will, as time goes by, deliver real change in our society.

Andy Sawford: Northamptonshire has the lowest reoffending rate in the country, despite the chaotic circumstances that prevail. That is a tribute to the local probation officers in my area. They are concerned that this ideological move is being rushed through without proper thought for the circumstances and that it has not been properly tried, tested or evidenced. The real concern is that the Justice Secretary is not like a shopkeeper gambling on a new line of stock; he is dealing with public protection. What is his response to the comments of Harry Fletcher of the National Association of Probation Officers, who says that this move will compromise public protection?

Chris Grayling: I do not agree with Harry Fletcher. I am making sure that, when it comes to risk of harm to the public, that remains in the public sector and that it will continue to do so.

Roger Williams: I pay tribute to the probation service for its work in my constituency, a very rural and sparsely populated area. What thought has the Secretary of State given to how these proposals will be carried out in such areas, which lack the presence of private sector and charitable organisations with the necessary skills to carry out rehabilitation?

Chris Grayling: The probation service in Wales has been one of the most innovative in doing this and has, in fact, in the past few months produced a blueprint on how this could happen in Wales, following a similar model to the one I have set out today. I fully expect to see members of the Wales probation team at the forefront of creating either mutuals or co-operatives to deliver the services. I pay tribute to the Wales probation trust, which is imaginative and innovative and has some great ideas to do precisely what my hon. Friend is talking about in difficult areas where communities in rural areas are spread out.

David Nuttall: I warmly welcome the Lord Chancellor’s statement. Often, small and medium-sized enterprises and voluntary providers are put off applying for Government contracts because of the complexity of the process involved. May I urge my right hon. Friend to make the application process to run probation services as straightforward as possible in order to maximise the number of applicants?

Chris Grayling: I can give that assurance. One of the things that I have learned from the contracting of the Work programme is to try to make the process as simple as possible for small organisations. I am not sure that we did it as effectively as we could have then, but we will certainly do so this time.

Glyn Davies: Along with many other Members, I greatly welcome the statement. Will my right hon. Friend the Lord Chancellor join me in commending the governor of HMP Shrewsbury, Mr Gerry Hendry, on giving the very highest priority to finding places for prisoners on release to live and work? He has demonstrated clearly that rehabilitation works, because reoffending has fallen greatly.

Chris Grayling: I indeed pay tribute to the work not just there, but across the prison service. We have some first-rate professionals in the probation service who have a strong future in delivering support to offenders in our communities, whether as part of a high-quality, specialist public sector probation service or, indeed, as part of one of the new generation of organisations.

Guy Opperman: The Labour party suggests that there is no evidence on mentoring. I spent the past 12 months studying that particular issue for my book, “Doing Time”, which, amazingly, is still available in shops. The fact of the matter is that the Labour party introduced custody plus in 2004 to 2007 on this exact issue, but it did not follow it through. It is this coalition that has the guts and determination to address the crucial bridge between prison and release.

Chris Grayling: My hon. Friend is absolutely right and I pay tribute to him for the work he has done. There is enormous expertise in this field in the House and I hope that all Members will feel able to take part in the consultation. The Labour party introduced power after power, scheme after scheme and pilot after pilot, often for PR purposes, but seldom did anything.

Martin Vickers: The Lord Chancellor rightly reminded us in his statement that the criminal justice system must both punish offenders and seek to rehabilitate them, but will he acknowledge that many of our constituents doubt that we have got the balance right? Will he reassure us, and is he confident, that his proposals will achieve outcomes that will increase public confidence?

Chris Grayling: I hope and believe so. The reality is that, whether we are the hardest hard-liner or the softest liberal on crime, we all have an interest in preventing reoffending. I understand where my hon. Friend and his constituents are coming from. That is why we have taken steps such as increasing the protection that householders receive if they meet an intruder in their home, introducing a mandatory life sentence for a second-time serious sexual or violent offender, and introducing a mandatory punishment to every community sentence. We will take further measures that will restore and rebuild the public confidence in the criminal justice system that was so lacking when we inherited it.

Mr Speaker: I thank the Secretary of State and other colleagues for their succinctness, which enabled 45 Back Benchers to question him in 41 minutes of exclusively Back-Bench time.

Points of Order

Chris Bryant: On a point of order, Mr Speaker.
	“The irregular use of the Queen’s name to influence a decision of the House is unconstitutional in principle”.
	You will know that, Mr Speaker, because it says so on page 440 of “Erskine May”. Will you confirm that that will apply to consideration of the Succession to the Crown Bill? Earlier, the Father of the House and the Prime Minister came perilously close—though they are wily birds and did not step over the line—to praying Her Majesty’s opinion in aid. Will you also confirm that if, on Second Reading, the Government signify that Her Majesty has consented to place her prerogative at our disposal, that will signify neither her approval nor disapproval of the Bill, the contents of the Bill or any amendments that may be considered in this House, but that it will be entirely for us to decide how to proceed?

Mr Speaker: The short answer is that I think I can offer the hon. Gentleman the comfort and assurance he seeks. I am grateful for his point of order and for his courtesy in giving me notice of it. I listened carefully to the exchanges in Prime Minister’s questions and I did not think that they offended against our rule against the use of the sovereign’s name to influence debate. I took the question to be primarily a factual one which, as “Erskine May” notes on page 441, is perfectly orderly.
	When the House comes to debate the Succession to the Crown Bill, the Chair will be alert to ensure that the guidance on using the name of the Queen or the names of other members of the royal family to influence debate, which is indeed set out on page 440 of
	“Erskine May”, is borne carefully in mind. The question of Queen’s consent is a separate matter. Page 2430 of the Order Paper on the House’s future business notes that consent is to be signified before the House embarks on the Second Reading debate. That is a technical issue when the Queen’s prerogative or interest may be thought to be engaged in a proposed measure. It simply confirms that the House has the freedom to legislate as it sees fit; it does not in any way convey the personal view of the sovereign.
	I hope that that is helpful to the hon. Gentleman and to the House.

Paul Flynn: On a point of order, Mr Speaker. You will recall that on two occasions, the names of the fallen in Afghanistan were not announced at Prime Minister’s Question Time, but were announced publicly on a Wednesday and a Tuesday. After protests from the House, the practice of announcing the names at Prime Minister’s Question Time was restored. You may have noticed today that the name of the soldier who was tragically killed recently in Afghanistan was not announced at Prime Minister’s Question Time. There may be a good reason for that, but the press states that the family have been informed. Will you ensure that this practice is resumed, so that we can be reminded of the true cost of war?

Mr Speaker: I am grateful to the hon. Gentleman. I did not have notice of his point of order, although I make no complaint about that. I do not claim to be entirely sighted on the subject. To my knowledge, the name has not been publicly disclosed. That is one possible explanation. His wider point, to which he and others attach great importance, was made forcefully and I hope that it will be noted in the appropriate quarters.

Children (Performances) Regulations 1968 (Amendment)

Motion for leave to bring in a Bill (Standing Order No. 23)

Tim Loughton: I beg to move,
	That leave be given to bring in a Bill to amend the Children (Performances) Regulations 1968 to streamline opportunities for children to take part in performances; to reduce unnecessary regulation; to clarify when a licence is required; to strengthen the emphasis on protecting children; and for connected purposes.
	This year marks the 50th anniversary of the Children and Young Persons Act 1963, which, among other things, brought in a system of regulating child performances. That was a welcome innovation to promote the ability of children to pursue their talents and strut their stuff in a safe and beneficial way, and it resulted in a comprehensive set of regulations that came into force in 1968.
	Fifty years on, that legislation needs updating. Back in the 1960s, we had only three terrestrial TV channels, whereas today we have hundreds of satellite and cable stations. “Britain’s Got Talent”, “The X Factor” and the explosion in so-called reality TV over the past 15 years or so were then just a figment of the imagination. The internet had not been invented. Ofcom was not regulating. Criminal Records Bureau checks were not being made. Jimmy Savile had almost been beatified. We therefore need the safeguards to be brought well and truly into the 21st century.
	The ongoing revelations in the wake of the Savile allegations have made it all the more urgent to make this system fit for purpose and to ensure that children can pursue their talents safely. Parents need to be assured that their children will not fall into the clutches of predators, nor be exploited by over-zealous producers and broadcasters. Although in most cases we should ultimately trust parents to know what is best for their children, we need safeguards against the few particularly pushy parents who think their six-year-olds are emotionally robust enough to debut on a stage in front of millions of prime-time viewers or to do the rounds of those rather cheesy child beauty pageants that seem to have crept across the Atlantic.
	I pursued this matter as Minister for children at the Department for Education, but was not able to persuade the powers that be to include it in the forthcoming legislation. I am hence promoting this stand-alone Bill today. However, I see no reason why it could not still be incorporated into the forthcoming children and families Bill. Much of the groundwork has been done and I believe that the provisions will be widely supported across the entertainment industry and across the political divide.
	The last Government commissioned Sarah Thane, the respected former chairman of the Royal Television Society, to undertake an exploratory systemic review, which was published in March 2010. Following work that we had done in opposition, I picked up the recommendations in her excellent report. Within the Department for Education, I consulted widely through working groups of experts from across the entertainment industry, broadcasters, regulators, local authorities, amateur
	theatre groups, chaperones, children’s organisations, child psychologists, parents and many others. Although there are still some minor issues of contention, there are surprising levels of consensus. We are all agreed that the status quo is no longer viable. Subsequently, that has been profoundly reinforced by the revelations involving Jimmy Savile and others in the entertainment industry in particular, where the arrests continue apace.
	The Government launched a public consultation exercise in May last year that ran until 3 August, but it has not yet reported. I believe that the recommendations in the Bill are clear, practical and proportionate, and that they will agree with the findings of the consultation, which we anticipate. I am grateful to all those who gave their time so willingly to inform that consultation exercise, and to Sarah Thane in particular for the immense amount of work that she has done and for her continuing support in carrying her work forward through my Bill.
	The basic principle in updating the regulations is outlined in Sarah Thane’s report, which states that
	“performing can be good for children and has the potential to develop a wide range of skills and talents”,
	and that children
	“must be free to express their talents and enthusiasm in a wide variety of ways, without the heavy hand of the state interfering where it is not needed.”
	At the moment, the regulations are administered by local authorities, which are responsible for issuing licences to children who perform. The Bill does not propose to change that. The problem is that the regulations are interpreted inconsistently and are often followed or enforced randomly across the country. For many authorities, this is not a mainstream activity with a dedicated full-time licensing officer, so a budding child performer can effectively be discriminated against by postcode.
	The regulations are too bureaucratic, so many children miss out on opportunities because the licences take too long to turn around. There is a requirement in some authorities that at least 21 days’ notice be given when applying for a licence, which makes many short-notice assignments completely impractical. In some cases, it can take considerably longer. Parents have written to me complaining that their children have missed out on licences because they have had to wait for the licensing officers to come back from holiday or because a production company has used an alternative actor who happened to live in an authority that was much more geared up for issuing licences quickly and without question.
	Each year, an estimated 45,000 licences are issued to child performers, with some authorities issuing as many as 3,000 and some fewer than 100—a wide disparity. Many theatre companies, both commercial and amateur, have a policy not to include children at all, simply because doing so is fraught with too many problems. That cannot be right. We need fewer but better rules, as well as more guidance that is more appropriate, so that the resources are focused on ensuring that local authority officers are effectively monitoring the efficacy of the regulations and that licences are being used properly to help producers to develop effective safeguarding policies, rather than on processing the often inappropriate and excessive paperwork.
	My Bill would reduce the occasions when full licensing is required but ensure that where it is required, it is proportionate and meaningful and everyone is held
	accountable for their ensuing responsibilities. There should be a presumption that licences will be issued unless there are strong grounds not to, but an onus on the employer or producer to identify and manage risk. Licences should be produced on a much reduced time scale, available online and sped up through the use of electronic databases and nationally promoted examples of best practice. There should also be greater flexibility in the terms of the licence, particularly in the case of filming, for which definitive time frames are not always possible. Surely the amount of work required of a child and the ensuing pressure, not the specific dates on which it can take place, is the more important consideration.
	Many of those problems can be dealt with by updating secondary legislation, but there are matters that require a change in primary legislation, not least a viable and contemporary definition of what “performance” actually means. My Bill would provide that after further consultation with experts.
	Fly-on-the-wall television programmes with no added level of risk need not be subject to regulations, for example when children are in a natural school or sporting environment. However, there is a particular concern when children are put in a contrived documentary situation, in which case the psychological implications need to be carefully considered. I could cite “Boys and Girls Alone” on Channel 4 some years ago.
	Under the Bill, it would remain the case that licences were not required where the performance was arranged by a school, or where participation in an activity posed no greater risks than those faced by a child in the ordinary course of his life and he was not being paid.
	We also need to make a greater distinction between amateur and commercial performances when it comes to requiring licences. There is a world of difference between children appearing in the amateur village panto surrounded by family members and neighbours, and those who tread the boards late at night alongside professionals, a long way from home, for money. My Bill would allow amateur companies to register with the local authority as an entity so that they can use children, rather than having to apply for an individual licence for children to take part. I know that many am-dram companies in hon. Members’ constituencies have complained about that for a long time.
	Current primary legislation states that when a licence is required, it cannot be granted a child under the age of 14 except when they are acting or dancing in a ballet and the part can be taken only by a child of that age, or when they are taking part in a musical. That is far too prescriptive and restrictive, and my Bill would remove that age and activity requirement. Instead, there should be protections reflecting broad age bands of children.
	Although more flexible individual licences should remain for children under 13 who are paid to perform, a more sensible approach for older children taking part in one-off large productions—or, as I have said, for amateur productions—is an extension of the simplified approval process known as “body of persons approval”. That way, a budding village Cinderella will go to the ball rather than be thwarted by waiting for a licence that is
	taking ages to turn around, and a large regional youth choir that performs occasionally with scores of budding Kate Jenkinses will not have to compile reams of paperwork for each of its members.
	I would scrap the so-called four-day rule, whereby if a child is not paid, a licence is not required for up to four days of performances in any six-month period. That is open to abuse. I would also set out clear national thresholds to ensure that those responsible for safeguarding the welfare of children, such as chaperones, have the appropriate ongoing training to do so. Would Jimmy Savile have succeeded in luring so many teenagers back to his dressing room if the chaperones had been there, on the ball and wise to the mesmeric charms of dodgy shell-suited celebrities? Many chaperones are doing a very good job, but there are no formal qualifications for the job and no nationally agreed standards, and my Bill would address that.
	There are a number of other technical considerations in my Bill to counter existing measures that are quite simply anachronistic, obstructive and unnecessary. One deals with child earnings, because at the moment how they will be used has to be stipulated. Others deal with the requirement for a GP’s certificate, provided at great cost, which is unnecessary; with the requirement of 15 hours of tuition a week; and with the requirements on performing abroad. I would also ensure that the broadcasting code enforced by Ofcom complemented the terms of the Bill.
	Overall, my Bill is intended to overhaul and streamline a system that is clearly now past its sell-by date, with opportunities for children to perform being greater than ever before. We need a system in which it is much clearer when licences are required, we need those licences to be available speedily, and we need proper enforcement and monitoring, consistently applied across all local authority boundaries. We also need greater professional status and recognition for the important work that chaperones do, subject to appropriate and proportionate standards and training across the country.
	Just as excessive and inflexible Criminal Records Bureau and vetting and barring requirements drove valuable volunteers away from coming forward, so a well-intentioned but bureaucratic system of performance regulations has led to too many budding young thespians being deprived of the opportunity to take to the stage. Under my Bill, Cinderella will be able to go to the ball secure in her parents’ knowledge that she will benefit and be safe, and that every necessary precaution has been taken to deter shell-suited predators.
	Question put and agreed  to .
	Ordered ,
	That Tim Loughton, Mrs Cheryl Gillan, Meg Munn, Mr Graham Stuart, Dan Rogerson, Andrea Leadsom, Ann Coffey, Dr Phillip Lee, Henry Smith, Pauline Latham, Mr Robert Buckland and Mrs Eleanor Laing present the Bill.
	Tim Loughton accordingly presented the Bill.
	Bill read the First time; to be read a Second time on Friday 1 March, and to be printed (Bill 118).

Opposition Day
	 — 
	[13th Allotted Day]

Pub Companies

[Relevant documents: The  Second Report of the Trade and Industry Committee, Session  2004-05, Pub Companies, HC 128, the  Fourth Special Report of the Trade and Industry Committee, Session 2004-05, Pub Companies: Government Response to the Committee’s Second Report on Pub Companies, HC 434 , the  Seventh Report of the Business and Enterprise Committee, Sessio n 2008-09, Pub Companies, HC 26, the  Third Special Report of the Business and Enterprise Committee, Session  2008-09, Pub Companies, HC 798, the  Fifth Report of the Business, Innovation and Skills Committee, Session 2009-10,  Pub Companies: follow-up HC 138, the  Eighth Report of the Business, Innovation and Skills Committee, Session 2009-10, Pub Companies: follow-up: Government Response to the Committee’s Fift h Report, HC 503, the  Tenth Report of the Business, Innovation and Skills Committee, Session 2010-12, Pub Companies, HC 1369, and the  Government’s response, CM 8222, and the o ral evidence taken before the Business, Innovation and Skills Committee on 6 December 2011, HC 1690-i of Session 2010-12. ]

Dawn Primarolo: I have to inform the House that Mr Speaker has selected the amendment in the name of the Prime Minister.

Toby Perkins: I beg to move,
	That this House notes the motion on pub companies passed by this House on 12 January 2012; recognises that a wide body of experts share the view that only a statutory code of practice which includes a free-of-tie option with an open market rent review and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; and calls on the Government to bring forward a timetable which will lead to that statutory code being enshrined in law as soon as is practicably possible and before the end of 2013 at the very latest.
	The whole House knows the importance of the Great British pub to both our economic prosperity and our national identity. It is not every week that, in the time between the Opposition laying out the wording of a motion and the debate on it, the Government announce that they will comply with most of the detail and accept entirely the spirit of it. We agree with, and are pleased with, the Secretary of State’s acknowledgment that the self-regulatory policy that the Government introduced in November 2011 has failed, and that a statutory code is indeed the answer to the vexed issue of pubcos.
	The Government’s announcement yesterday that they would consult on a statutory code will give hope to all those who have called for statutory regulation for nearly two years. It would be churlish not to recognise that the Secretary of State has had the courage to admit that the Government got it wrong. We may never know whether his decision was made in an attempt to stave off an embarrassing rebellion in this debate, whether the response to his call for evidence finally convinced him that the game was up, or whether he simply reflected that the Labour party, the industry and—let us be honest—just about everybody has been right all along. However, if this chance is seized, maybe no one will really mind why it happened.

John Healey: I pay tribute to my hon. Friend for pressing for this debate. Does he agree that it is a good example of Parliament—all-party groups, Select Committees and the Labour Opposition—playing a part in getting the Government to do the right thing in the end? I hope that they will be toasting Toby Perkins in pubs across the country tonight.

Toby Perkins: I am grateful to my right hon. Friend for those comments, and he is entirely right. The potential exists for this to be a really significant moment, but I do not think we can go any further than that yet.
	The Secretary of State’s call for evidence was certainly enthusiastically answered. He wrote to seven different organisations to ask for their views on how self-regulation was working, and he received 19 responses. That is a return rate of 271%, which is the sort of extraordinary and implausible statistical feat that we generally expect to see in a Liberal Democrat “Focus” leaflet, but there we have it, right at the heart of Government.
	Before I get into the detail of how we can ensure that the Government’s announcement makes a meaningful difference, I will reflect briefly on why the debate is so important to so many Members, their constituencies and constituents and the economic and social fabric of our great country. Pubs are synonymous with our great island story, from fictional boozers brought to life, like the Rovers Return in “Coronation Street”, to pubs that have gone down in history such as Ye Olde Cheshire Cheese, famously frequented by Samuel Johnson and where Mrs Perkins and I had a very pleasant lunch just a few weeks ago.
	In almost every village, town or city in the land, and indeed in every Member’s constituency, there will be pubs that make us proud of our localities and say much about our areas, and which our constituents wish to see thrive. Britain’s pubs are not only important as key hubs in the community, they are economically vital. Last year, beer and pubs contributed £21 billion to UK GDP, and the Campaign for Real Ale has estimated that the average pub employs 11 people and contributes £80,000 to the local economy.
	However, CAMRA recently revealed that around 18 pubs are closing every week, and countless more are fighting for their lives. As we know, when pubs close the cost of failure is felt not just in social terms but in economic terms, at a time when our faltering economy can afford it least. There are now 2,582 fewer pubs than in 2010, equating to 200 jobs lost for each week of the year.

Andrew Griffiths: I agree with the hon. Gentleman that 18 pubs closing a week is too many. He will know, however, that under the previous Labour Government pubs were closing at a rate of 54 a week—four times as many. Will he apologise for the Labour party having let down pubs so badly?

Toby Perkins: That is a frankly disappointing contribution from the hon. Gentleman. One key point that people may reflect on is that there are now 2,582 fewer pubs than in 2010.

Andrew Griffiths: Will the hon. Gentleman give way?

Toby Perkins: Let me respond to the hon. Gentleman’s first point before he makes a second one. Using his logic, we could eventually have only 15 pubs left and he would say that was a great success because only 15 have closed this week. As the overall stock reduces there have obviously been fewer closures. Nevertheless, there are now 2,500 fewer pubs than in 2010.

Andrew Turner: Will the hon. Gentleman give way?

Toby Perkins: I will give way, but let me make a little progress first. I myself am an enthusiastic intervener and I want to give opportunities to Members to intervene, but I know that this debate is considerably over-subscribed, so I must try to strike a balance.
	An opportunity for fairness now exists in the industry, and I pay tribute to all those who kept believing and making the case for the historic opportunity that we are considering today. The Sunday Mirror has been a loyal friend to Britain’s publicans with its invaluable “Support Your Pubs” campaign. I also place on record my thanks to Simon Clarke of the Independent Pub Confederation, Dave Mountford and the GMB, Steve Corbett of Fair Pint, and CAMRA for the work they have done to dispel the myths propagated by some in the industry.
	I will refer in due course to the work of the Business, Innovation and Skills Committee, but I first want to acknowledge the excellent leadership on this issue from the Committee’s former Chair, the hon. Member for Mid Worcestershire (Peter Luff), and the current Chair, my hon. Friend the Member for West Bromwich West (Mr Bailey). The hon. Member for Leeds North West (Greg Mulholland) and the hon. Member for Northampton South (Mr Binley), who is sadly not present in the debate, have made a massive contribution to this issue, and my right hon. Friend the Member for Torfaen (Paul Murphy) has steadfastly warned about the problems caused by a compulsory beer tie. As well has having wonderful judgment, my right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for Cardiff West (Kevin Brennan) have also played a significant role.
	There are currently around 50,000 pubs in Britain and around 28,000 are pubco pubs.

Andy Slaughter: My hon. Friend has rightly named the heroes of this debate but he should also name the villains—the pubcos and companies such as Punch Taverns. He will be familiar with my constituents Joe and Betty Hynes, who had to close one of their pubs—the other is under threat—because of the predatory activities of Punch Taverns. Had the statutory code come in earlier, many pubs, including theirs, might not have closed. Are the Government responsible for the delay that has taken place?

Toby Perkins: My hon. Friend understandably feels incredibly passionate about the experiences of people in his constituency and the impact that this issue has had on real people’s lives and his community. That is why we are having this debate and so much research has gone into it, and why we are now in a more positive position than a couple of months ago. He is right to raise that point. The evidence suggesting that how the industry was operating was wrong is unanswerable.
	There are 28,000 pubco pubs that operate on a tied arrangements, and approximately another 10,000 are owned by pubcos and breweries on a different basis. They are the overwhelming majority of the industry. Of course, many things have placed stress on the industry. In recent months we have had debates about the level of taxation, but the increasing cost of living, wage stagnation, the effects of the recession and the continued lack of growth in our economy, and the competition for the leisure pound, have all had an impact on the industry.

Andrew Turner: May I commend the Opposition on bringing forward these proposals and commend the Government on doing so as well? Will the shadow Minister please inform the House what the cost implications will be to the Government of allowing pubs to transfer from a tied to a tie-free licence?

Toby Perkins: That is a valuable question and one of the things we will be investigating in more detail during the consultation. I think, however, that the costs will be minimal in comparison with the massive loss to the Government from revenue going out of the industry as all these pubs close. If we recognise—as many of us do—that the way in which pubcos have constituted their business model is having a dramatically damaging effect on the industry, we will see that the cost of those closures will dwarf any cost to the Government from such a transfer.

Greg Mulholland: The hon. Gentleman will be aware that many pubco lessees are receiving considerable amounts of tax credit because despite having a big turnover they are not earning enough. The taxpayer is currently subsidising the pub companies, which is outrageous.

Toby Perkins: That is a typically excellent and important point from the hon. Gentleman. Evidence shows that more than 50% of landlords with tied pubs earn less than £15,000 a year. That is shocking to many people who know the huge hours that many publicans put in.
	I have already mentioned some challenges facing the industry, and although the health benefits of the smoking ban are widely accepted, we must recognise that it had an impact on many pubs. We have seen aggressive pricing from supermarkets as the off-trade increased its market share. As if that was not enough, the trade is now reeling from the news that I am on the wagon for January. I have not touched a drop for eight days, 13 hours and about 37 minutes.
	As my right hon. Friend the Member for Wentworth and Dearne mentioned, pub companies have been the subject of four Select Committee hearings in seven years, and on each occasion the big pub company lobby said that this time the steps they would put in place would really make a difference. The scrutiny that the Committee has given the issue, and the tempered and responsible way in which it has attempted to work with the industry, demonstrates our Select Committee system at its very best.
	The previous Government deserve tremendous credit for their empowerment of the Business, Innovation and Skills Committee on this issue. They recognised the expertise and diligent consideration that went into the reports and trusted the Committee to judge whether a
	statutory code was the answer. It is worth reminding ourselves that throughout Labour’s time in office, the Committee’s recommendation was to give self-regulation time to work. Its verdict that the final chance for self-regulation to work had passed came in summer 2011, but until that time it never called for regulation to be brought in. Therefore, any claim that this issue should have been dealt with years ago is unreasonable because the Government were working on a cross-party basis with the Committee and the all-party save the pub group. Everyone attempted to give the industry every possible opportunity to put its house in order before going down the route of regulation.

Peter Bottomley: rose —

Andrew Griffiths: rose —

Toby Perkins: I will give way to the hon. Member for Worthing West (Sir Peter Bottomley), and then I will give the hon. Member for Burton (Andrew Griffiths) another stab.

Peter Bottomley: I declare that I am a member of CAMRA. Without getting into party politics, can we agree that to compete effectively, people running a pub must be able to buy their supplies at market price, not a rigged higher price, and they must pay market rents rather than rigged rents that are higher?

Toby Perkins: We absolutely can agree on that. I hope Ministers hear that message—it is precisely the principle of the motion on which we will vote shortly, and I welcome the opportunity to see the hon. Gentleman in the Division Lobby. He makes the point very well.

Andrew Griffiths: I recognise what the hon. Gentleman says—that the Business, Innovation and Skills Committee did not call for statutory regulation in its reports—but does he not think that the Labour Government needed to have done something in their 13 years in government, when more than 9,000 pubs closed?

Toby Perkins: Many challenges, to which I have alluded, faced the industry during the previous Government’s term. In the last two or three years of the Government, we had the recession and people were stretched, and in times before the recession, people’s habits were changing. Pubcos were operating in the way I have described, but the Labour Government attempted to give them the opportunity to put their house in order. I believe that the hon. Gentleman is of the view—I apologise if I am wrong—that the pubcos should have been given longer. That was his view when we debated pubcos about a year ago. Members on both sides of the House accept that pubcos were part of the problem and that the previous Government attempted to give them the chance to do things right, so it is difficult for him to criticise the previous Government for doing so.

Martin Horwood: I acknowledge that the deadline for self-regulation was June 2011, but in the spirit of giving cross-party credit, will the hon. Gentleman acknowledge the contribution to those campaigns made by Liberal Democrats, including me,
	as the promoter of a private Member’s Bill on pubcos, my hon. Friend the Member for Leeds North West (Greg Mulholland), as the leader of the all-party save the pub group, and the Ministers—the Secretary of State for Business, Innovation and Skills and the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the hon. Member for East Dunbartonshire (Jo Swinson)—who preside over this happy occasion, when it looks very likely that the statutory code will be introduced?

Toby Perkins: I was with the hon. Gentleman for a bit. I have referred to one of his hon. Friends, but if he is disappointed that I did not mention him, I apologise. I do not mean to be ungallant, but the Under-Secretary’s first contribution to the debate was to tell the House that self-regulation was working and there was nothing else to say on pubs.

Jo Swinson: rose —

Toby Perkins: I do not know quite how the Under-Secretary has got into the position of taking credit, but we might be about to find out.

Jo Swinson: It might be helpful to the House to clarify that I did not make the contribution the hon. Gentleman describes to the House or anything else. I am not sure where he gets his information.

Toby Perkins: I will be talking about the quotes attributed to the Under-Secretary by the Morning Advertiser. She is welcome to take the paper to court if they are not true, but it says that she said that, so I was working on that basis.
	The hon. Member for Cheltenham (Martin Horwood) referred to the role of the Secretary of State, who made it clear when appearing before the Business, Innovation and Skills Committee on 20 July 2010 that he would honour the previous Government’s commitment. I have no idea why he did not honour that commitment—it should have been honoured 18 months ago. Perhaps it was naivety or a generosity of spirit that does him credit—the belief that, this time, the pubcos would know that the Government were serious. I do not know, but we should be clear that the delay has been costly for the industry and catastrophic for some victims.
	Let no one say that the pubcos were not given long enough or that there has been a rush to legislate. Make no mistake: when the Committee said that statutory regulation was needed, it was the reluctant conclusion of Members who had taken every possible step to avoid making that recommendation. Given the breadth of support for the Committee’s stance, it is hardly surprising that there was dismay when the previous Minister, the right hon. Member for Kingston and Surbiton (Mr Davey), decided instead a year ago to give the pubcos yet another final chance.

Dan Rogerson: I hope the Morning Advertiser has a robust legal department, because the hon. Gentleman might want to discuss how he was quoted in December 2012 on the Labour party’s lack of commitment to legislate—if self-regulation had been proved to have failed—before the general election. I am
	not clear whether the Labour party’s position has moved swiftly since December, but I agree with him, Ministers and all hon. Members that we want regulation. We are going to get it, so I wish he would stop trying to attack individual Ministers who have been working to get something delivered.

Toby Perkins: Perhaps we could have a group hug at the end of the debate, but it is important at this stage to lay out the history of what has happened. I do not intend to attack Ministers. I put on record at the time and continue to hold the view that a considerable mistake was made 12 to 18 months ago. At the same time, I give credit to the Secretary of State for being big enough to admit that and to come to the House and say, “We got it wrong; now we will get it right.” Every Government in history have made mistakes. At least the Secretary of State has had that courage. That is a balanced view.

Gloria De Piero: I am glad my hon. Friend says that, because the debate is not about playing party politics, but about agreeing a course of action to save our pubs. In the past five years, we have lost nine pubs in Kirkby and Sutton, and I do not want to lose another nine in the next five years, so I am pleased the House has come together to agree measures. One pub, the Red Lion in Bagthorpe, was particularly important to me last year—it was where my partner proposed to me.

Toby Perkins: There is barely a dry eye in the House. If I am any judge, the fact that my hon. Friend is spending more time in Ashfield is considerably good news for the pub industry close to her.

Several hon. Members: rose —

Toby Perkins: I am going to crack on.
	In summing up the debate a year ago, the former Minister claimed that he had come up with the toughest self-regulatory regime imaginable. Whatever hon. Members’ perspective, surely none can believe that that was true. The code did not include the free-of-tie option, which is consistently cited as the most significant factor. It did not include the principle of tied lessees being no worse off or an independent adjudicator, and it did not deliver an advisory service. The organisations that were formed were hopelessly compromised. How could anyone possibly believe that that was the toughest regime imaginable?
	In case anyone believes the House did not do its duty, let us recall the House’s view at the time. I said in the debate a year ago that there was a cross-party consensus in that Members of all parties agreed that the Government were wrong. To a man and woman, not a single Member dissented to the motion that only a statutory code with a free-of-tie option and an open-market rent review would resolve the problem.
	That is exactly the same request that the Opposition respectfully make today. The right hon. Member for Kingston and Surbiton did not vote against the motion, and nor did the Secretary of State, the Prime Minister or any Member of the House, yet despite the vote, the Government seemed to believe that that was that. On 20 October 2012, the Under-Secretary declined in an interview in The Publican’s Morning Advertiser—so it is alleged—to take action, saying that self-regulation was working and that the Government had delivered on all their commitments. Two weeks later, she received
	notification of Department for Business, Innovation and Skills questions to be answered on 8 November and saw that four of my hon. Friends had tabled questions on pubcos and the Government’s failure to live up to the motion passed by the House. Between Monday and Thursday of that week, the Secretary of State chose to conduct his call for evidence. On 20 December, the Labour party gave notice of its intention to call this debate. Yesterday, less than 24 hours before the debate, the Government made the announcement that we are discussing. That is the recent history.

Tony Cunningham: Will my hon. Friend give way?

Toby Perkins: I have come to an entirely natural breaking point, so I am delighted to give way.

Tony Cunningham: All hon. Members welcome a statutory code, but I hope my hon. Friend agrees that there is no point having one unless it has teeth. A statutory code must have the requisite teeth.

Toby Perkins: That is an excellent point—it is so good that I intend to make it myself shortly. I agree entirely with my hon. Friend.
	You will note, Madam Deputy Speaker, that I have thus far been unremittingly positive in my contribution, but even I have my limits. Even my naturally sunny disposition cannot conceal the painful truth of the challenges that the Secretary of State faces if his optimistic announcement is to deliver change. The stipulation of the principle that a tied licensee should be no worse off than a free-of-tie licensee will inform the interpretation of decisions made by the Royal Institution of Chartered Surveyors. The advice that guidance should be interpreted in the light of the principle is an extraordinarily welcome step. Beyond rents, however, it is hard to see how that principle can be assured without the freeing up of the market that would happen if a free-of-tie option were offered to all new or renewed contracts. Surely, it is only the combination of fair rents and freedom to buy where the landlord chooses—tied if they wish, free if they do not—that frees the industry from the shackles of the pubcos.
	Let me make it clear, we are not calling for the end of the tie. We support the Government’s decision to restrict these measures to companies with more than 500 pubs, and recognise that some pubcos use the tied arrangement responsibly. We also value the small family breweries and recognise the important role the tie plays for them. That is why we support a genuine free market option for the major pub-owning companies that allows for a free-of-tie option, with fair rent or a tied option, to be chosen by the landlord. It is impossible to see how the Secretary of State’s proposals will not be compromised without that.
	In the initial press release issued at 1.40 pm yesterday, note 7 read:
	“The Code will not mandate, as some campaigners have suggested, a ‘free of tie option with open market rent review’. Neither will it abolish the beer tie. Evidence strongly suggests that the tie itself is not the issue—it is in fact a valid business model and its removal would significantly harm the British brewing industry. It is the abuse of the tie in certain circumstances that is causing the problem. The Code will ensure that pub companies use the tie responsibly.”
	By 4.37 pm, less than three hours later, an amended press release had omitted note 7 and there was no mention of the free-of-tie option. This is no way to run a whelk stall, much less take crucial decisions on a vital and struggling industry. The central part of this whole issue was ruled out at 1 o’clock, but by 4.37 pm was apparently back on the table.

Andrew Gwynne: My hon. Friend is absolutely right to push this crucial issue. He is also right to say that the issue is not necessarily about pubcos, and that for some pubs it is a viable business model. The real worry, however, is that without a free-of-tie option, irresponsible pubcos will just continue to use this business model as nothing short of a savings-stripping exercise.

Toby Perkins: I could not agree more with my hon. Friend, who makes the point extremely well.
	I appreciate that yesterday was a bit of a day for the Secretary of State, but we could do with clarity on the free-of-tie issue. Assuming that the new version is right, why was note 7 there in the first version? Is the industry supposed to have confidence that the Secretary of State has not made his mind up when the thoughts in his mind, wildly at odds with the view of this House and all established thought in the industry, are so clearly exposed? I am assuming that it was not a typo, and that a monkey did not arrive at his keyboard and randomly tap away 81 words in what appear to be an order. If it is not a mistake, someone wrote them and wrote them for a reason. I hope the Secretary of State will respond to the point and say why that note came out initially.
	There are other significant challenges with the way the system is currently operating. On independent advice, the British Institute of Innkeeping advice service, which was promised for July 2012, still does not exist, and there would be questions about its independence if it did. Meanwhile, the truly independent Pubs Advisory Service, a voluntary organisation, is under-resourced and steps must be taken to strengthen awareness of it and to retain its independence. The Pubs Independent Conciliation and Arbitration Service is not viewed as independent at all. It is funded and dominated by the big pubco lobby. It is also there to see if the pubcos are adhering to the entirely inappropriate and inadequate codes that currently apply.
	I met Alan Yorke yesterday, the first person to go through the PICAS process. He described it as shambolic, intimidatory and not remotely independent. He tells me that he felt that it was entirely beholden to the pubco with which he was in dispute, and, despite his winning the case, the successful attempts by the pubco to delay the process resulted in him losing the pub before the case was heard. He is now being pursued through the courts for back rent from the pubco, despite its never completing the task that he had originally sought action on. With all the problems that the Secretary of State has identified, how can he possibly be satisfied with PICAS? Yet yesterday he described it as working well, with two of the three cases that have gone in front of it winning their case. Mr Yorke’s case is one of those that won; sometimes winning does not feel so great.
	The Pubs Independent Rent Review Scheme is similarly discredited. Of the five independent reviewers in London, it appears that four have clear conflicts of interest as businesses that provide services to the big pubcos. I can provide the Secretary of State with specific details of their links, if he is unaware of them, but suffice it to say that there is considerable room for improvement. The BII’s own financial position is described as “pretty grim” by its chairman, and its dwindling membership suggests distrust about its relationship with pubcos and the potential reliance on them. We understand that the proposed overarching body that will look after each of those organisations will be similarly compromised. The Guild of Master Victuallers and the Association of Licensed Multiple Retailers were apparently being offered places on the organisational board in return for signing up to the discredited original framework code.
	The Secretary of State laments that the measures taken 14 months ago have not led to a culture change in the industry. How did anyone possibly think that they would do so when they required so little of the pubcos? We should remember that the Secretary of State claimed that his solution would be quicker, could be just as effective, and would ensure that pub companies changed their mode of operations.
	I have here the code of Enterprise Inns. Members will be interested to know that it has various provisions that were cited by the British Beer and Pub Association to the Department for Business, Innovation and Skills as “immediate improvements” to the version 5 framework code. They were copied and pasted by the Department into the Government response in December 2011. There is abolition of upward-only rent reviews; training availability; access to information on the pub—letting details, trading information, rent calculations and time scales for taking up occupation. There is availability of the price list. All those steps were supposed to be the big improvements that the Minister had wrung out of the pubcos. However, that is Enterprise’s code from 2002. All that is already there—not “immediate improvements” at all. The previous Minister also said that the code would rebalance risk and reward within the industry. Members will be aware that at the meeting of the all-party save the pub group the balance of risk and reward between the pubcos and their lessees was not, in the view of the BBPA, something in which it had any role.
	The challenges facing the Secretary of State are significant if he is to deliver the real change that Labour is calling for in this debate. He has made a start. If, having started, he continues to follow the courage of his convictions, he will find that Her Majesty’s Opposition will do everything they can to help to get a meaningful code on the statute book as quickly as possible. We will work with the Government, but their response must pass three simple but key tests. First, will the statutory code include a free-of-tie option and a guest beer right? Secondly, will it deliver fair rents? Thirdly, will the independent adjudicator and the independent advice service work properly? It appears from comments made by the Secretary of State that there is real potential for delivery on the rents and the adjudicator and the advice service. However, there is a lack of clarity on the beer tie and a guest beer right, both of which are central standards that a whole range of organisations will be asking the Government to meet.
	Let me make it clear that if the Government shirk their responsibility and the situation remains as it is today, when the next Labour Government come to power in 2015 we will introduce the regulation. However, this Government should introduce what we have called for today. The British pub stands on the precipice. The industry has failed the fairness test and it falls to this Government—or to the next Government—to have the bravery to do what is right. We will not fail the British pub; we hope the Government will not either. I commend the motion to the House.

Vincent Cable: I beg to move an amendment, to leave out from “House” to the end of the Question and add:
	“recalls its Resolution of 12 January 2012 on pub companies; recognises that a wide body of experts share the view that only a statutory code of practice and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; calls for a statutory code, which would enshrine in law both an overarching fair dealing principle and the fundamental principle that a tied licensee should be no worse off than a free-of-tie licensee; and believes that the consultation will establish how best to do this, as well as producing proposals for a strong adjudicator with the power to arbitrate disputes, investigate breaches of the code and impose sanctions, including financial penalties for the most severe breaches, as soon as is practicably possible.”
	I welcome the opportunity to debate this issue, which I think many of us come to as constituency MPs. We have pubs in our constituencies, many of which have had serious difficulties with pubcos, and have faced real hardship and loss. We also recognise that this is an important industry for the economy, with 50,000 small businesses employing several hundred thousand people, many of whom are very badly paid. For many of us, pubs are an important community asset. That is the context in which we operate.
	Our approach was triggered in October, when I appeared before the Select Committee on Business, Innovation and Skills. The members of the Committee raised their concerns about how the self-regulatory approach was working. As a consequence of that discussion, I immediately wrote to the industry for evidence on what was happening. Several things have clearly changed. The approach adopted last year had produced some results. The independent arbitration service, PICAS, had been set up and, as the hon. Member for Chesterfield (Toby Perkins) described, in two of the three cases referred to it, it found against the pubcos, and version 5 of the industry framework code was incorporated into contracts at the end of 2011.
	It was clear, however, from the evidence—the 19 submissions—that the changes had not gone far enough. For example, very little effort had been made to notify tenants and lessees about their rights under the new system. That was an example of the lack of implementation under the voluntary code. After consultation with colleagues, therefore, I wrote yesterday to the Chair of the Select Committee to inform him that I wished to establish a statutory code and to proceed with public consultation.

Peter Luff: I join the chorus of approval for the decision the Secretary of State just outlined to the House, and in the spirit of the intervention from the right hon. Member for Wentworth and Dearne (John Healey) and of my favourite proverb, “Success has many fathers, but failure is an orphan”,
	I would like to say that this is a victory for Parliament, for the Select Committee system and, above all, for pubs themselves.

Vincent Cable: That is absolutely right. I am not sure that being tribal about this is very helpful. My hon. Friend chaired the Select Committee when it produced a succession of highly creditable reports that were subsequently built on by the work of the hon. Member for West Bromwich West (Mr Bailey) and his colleagues. Indeed, Members across the House, whether Conservative, Labour or Lib Dem Members, including my hon. Friends the Members for Leeds North West (Greg Mulholland) and for Cheltenham (Martin Horwood), and others have all played an important part.
	I realise that, given that this is an Opposition day, the Opposition spokesman could not resist a bit of politics, but I would make two simple points to him. I think he entered the House in 2010, along with many of his Front-Bench team, and I get the sense sometimes that for some people 2010 is year zero, when history began. There is a tendency to forget what happened before. As he acknowledged, the Select Committee first investigated this subject in 2004, and despite his contempt for the self-regulatory approach, the last Government persisted with it for six years. They decided in February 2010, shortly before the election, that stronger action was needed, but it was too late to do anything.
	I know the Opposition think that people will be swinging their Toby jugs on the basis of the speech by the hon. Member for Chesterfield, but he had the unfortunate experience, which several of us have had, of being misquoted—possibly—by The Publican’s Morning Advertiser, when he told it on 13 December that he could
	“not commit to a manifesto pledge…until 2015, and only if the self-regulation agreement has failed”.
	So the hyperbolic tone of his speech does not reflect where he was as little as a month ago.
	None the less, we are where we are. As my hon. Friend the Member for Mid Worcestershire (Peter Luff) said, great credit should be given to the parliamentary system. We all now understand the need for stronger action through a statutory code. The culture change that we all wanted did not happen, and the simply fact is that although some pub companies have behaved well—it is important to acknowledge that—in too many cases there has been exploitation and a squeezing of tenants and lessees, causing real hardship. It is worth noting that many of the small businesses involved—about half of tied tenants—are existing on incomes of £15,000 or less.

Heather Wheeler: I congratulate the right hon. Gentleman on yesterday’s press releases and the great announcement. This is a hugely difficult topic. South Derbyshire, which is next to Burton, is enmeshed in the brewing business. Indeed, my husband worked for brewers for 40 years, so it has been a lifelong journey for us. We have seen fantastic pubs, such as the Old Talbot in Hilton, going under because of these difficulties with the tie, but I am grateful to hear that the statutory consultation will relieve pubcos with fewer than 500 pubs. Family pub companies work this very well. It is a model that ought to work; it is the extremes that need to be dealt with. Perhaps that can be tweaked in the consultation.

Vincent Cable: Yes, that is an extremely good, balanced statement of the factors we have to take into account here. The hon. Lady is right that we propose to deal with the larger pub companies—those with more than 500 pubs. We will be consulting on that, but that is the approach we intend to adopt.

Greg Mulholland: I congratulate my right hon. Friend warmly on this wonderful announcement for Britain’s pubs. I urge him to emphasise, however, that there are many small pub companies doing well, taking on pubs, employing people and expanding, which shows that the problem is not with the pubs or companies, but with the giant lease pub companies that have abused both the model and their position.

Vincent Cable: Yes, my hon. Friend is absolutely right. I shall say more about this later, but the microbreweries and innovative breweries are a major growth industry, expanding well and offering a more varied service. They are a great success story and we do not want to do anything with this new approach that will undermine them.

John Healey: I welcome the Secretary of State’s commitment to a statutory code of practice, but would he also accept that the viability of hundreds of pubs is damaged by high and escalating beer duty? Will he ensure, in his Department’s budget submission, that BIS Ministers also argue for an end to high beer tax and inflation-busting increases and for an end to the system that favours foreign-produced wine over British-brewed beer?

Vincent Cable: The right hon. Gentleman is right that, as the Opposition spokesman acknowledged, a variety of factors have hit the pub industry, besides the structure of ownership. I do not know whether the right hon. Gentleman was a Treasury Minister in 2008 when the beer duty escalator was introduced.

John Healey: indicated  dissent .

Vincent Cable: The right hon. Gentleman shakes his head. Nevertheless, many of us in the House voted for those beer duty increases, so I cannot disown them at this stage. They are an important source of revenue, as his Government, as well as ours, realised.

Gerald Howarth: I cannot confess to being a great beer drinker, although I supported the Shoulder of Mutton in Assington, Suffolk, where I spent Christmas with my daughter—so I did my bit for the economy to make up for the hon. Member for Chesterfield (Toby Perkins), who clearly has not done his bit to support the industry. In response to the right hon. Member for Wentworth and Dearne (John Healey), I would like to say that the escalator was introduced by the last Government. This Government are continuing it, however, and it is unquestionably doing serious damage to something that everyone in the House really values in our communities, whether rural or urban. Fuller, Smith and Turner, a fantastic family-owned business, tells me that, out of a turnover of £304 million a year, £114 million —37%—goes in tax of one form or another. Will my right hon. Friend address that matter with the Chancellor?

Dawn Primarolo: Order. This is a very short debate and many Members wish to speak, but some of them are repeatedly intervening on the Secretary of State. It would be good if, first, interventions could be short, and secondly, those wishing to speak could be a little more disciplined, given that there is already a five-minute time limit on Back-Bench speeches. At this rate, that is going to go down.

Vincent Cable: I am afraid that I cannot offer the hon. Gentleman the assurances he wants on beer duty. I supported the Government’s approach to the taxation. On his drinking habits, I will only say that, like several of us, I am still haunted by having signed the temperance pledge aged 11.

John McDonnell: I apologise to the Secretary of State, because I will have to leave for another debate soon. There is a sense of urgency in my constituency about his matter, however, so will he give an indication of the time scale for the introduction of a statutory code?

Vincent Cable: We want to get on with this as quickly as possible. We have to launch a consultation, receive the results and then act on them, hopefully over the spring. That is the time horizon we are looking at.

Andrew Griffiths: I am mindful of your remarks, Madam Deputy Speaker, but I want to ask a simple question. The press release says that this will apply to companies with more than 500 tied pubs. There are 52,000 pubs in the country and hundreds of companies, brewers and businesses that own pubs. Out of all of those, to the nearest two, will the Secretary of State tell me how many companies this legislation will affect?

Vincent Cable: I am not going to guess, but it is a rather small number.

Jeremy Corbyn: Basically, the problem in London—certainly inner London—is property values. Many pubs close because pub companies and others make a great deal of money out of selling them and moving on into residential accommodation. My borough council is trying to introduce a planning policy that does not allow an automatic change of use. Is there anything the Secretary of State can do to preserve what are very important community assets from property speculation, beyond what is already happening to the pub industry through this lack of regulation?

Vincent Cable: As I understand it, there is in any event a specialist use class under the planning regime, which, as it currently stands, provides a degree of protection. We have a programme, which one of my ministerial colleagues introduced a month ago, for supporting community pubs; I do not know whether the hon. Gentleman’s local council and community are taking advantage of that.

Toby Perkins: Further to the question that the hon. Member for Burton (Andrew Griffiths) asked, can the Secretary of State clarify whether he is taking purely about pubcos with more than 500 pubs or about pub-owning companies with 500 pubs?

Vincent Cable: I have just checked the numbers: it was not two, but six companies that are likely to be affected under the current proposal.
	Let me go back over some of the salient facts that led us to this position.

Toby Perkins: With respect, the Secretary of State did not get the opportunity to answer my question. Are we talking about pubcos or pub-owning companies?

Vincent Cable: I think we are talking essentially about the latter—although most of the abuses have happened in the relatively small number of pubcos that happen to have a particular business model—but as I have said, we will define the precise range of companies that will be covered in the consultation.
	There has been a contraction of the industry, as the hon. Gentleman acknowledged, from 70,000 pubs in 1980 to 50,000 today. The financial crisis brought into stark relief the slow process of sectoral decline. At present, 18 pubs are closing every week—that is, 18 net; some are opening. Various factors have aggravated the problems of the industry—we have discussed one or two already. The beer duty escalator is one and the outlawing of smoking is another. Many of us supported that measure on public health grounds; none the less, it drove away a certain amount of the clientele. Having voted for those things, I would not criticise them, but we all have to acknowledge that the problems of the pub industry are multiple, and the structure of the industry, which is what we are concerned with in this debate, is only one of those factors.
	However, it is undoubtedly the case that the activities of the pubcos, with their highly leveraged business model, have intensified the crisis. These companies were established in the 1990s and started to attract comment and criticism a decade ago. Like an awful lot of other business models that were constructed in the long, artificial, debt-based boom, there did not appear to be a great many problems at the time. With the banking collapse and subsequent recession, the weakness of companies with high debt-to-equity ratios has been rather brutally exposed. What we have seen in recent years is the pubcos trying to retrieve their financial position at the expense of their tenants. We are all familiar with well managed, popular pubs in our constituencies being driven to the wall by, frankly, exploitative financial practices.

Gerry Sutcliffe: Enterprise Inns announced over Christmas that it would go from 6,000 pubs to 5,200 over the next three years. It will be important to get the code of practice in place quickly, because some of those will be the tied pubs.

Vincent Cable: They will, and the terms of sale under which that pubco, along with others, is disposing of those pubs is another important element in the protection that we now propose to offer.
	The pattern of behaviour we see in this area—where there is a serious imbalance between the contracting parties in the business relationship—is not unique to the pub industry. We see something similar with the banks and small business, as has been exposed by the derivatives scandal, and in the relationship between supermarkets and the farmers who supply them. In both cases, Parliament and Government have accepted
	the need to act to protect the weaker parties. That is precisely the position we have now reached with the pubcos. We took the view in 2011 that they should be put on probation, with a strengthened voluntary code. We gave them every chance, but we concluded that there was not enough progress. We therefore decided to establish, subject to consultation, the statutory code and an independent adjudicator, as I have described. I am disappointed—the Labour party probably is too—that a long period of trying to get a voluntary process has not worked sufficiently. I stress that we are not starting from the standpoint of a competitive market; rather, we are often talking about relationships that are almost feudal in character. We want to introduce a relationship that is genuinely market based, where there is genuine competition and a genuine choice for people entering the industry.
	Let me describe more specifically how we envisage the code operating. It will draw on the existing framework code—we are currently on version 5 and there is a discussion about version 6—but be strengthened to include an overarching “fair dealing” provision and the fundamental principle that a tied tenant should be no worse off than a free-of-tie tenant. I recognise that those concepts, especially the first, will need legal clarification.

Chuka Umunna: Can the Secretary of State explain why the Government have taken the view that the new code will not contain the requirement for there to be a “free of tie” option, as opposed to the formulation he has just expanded on?

Vincent Cable: We have not come to a final view on that. That is something the consultation process can elicit. As I will set out, and as I think the hon. Gentleman’s spokesman said too, there is no fundamental problem with the tie—there are other ways of dealing with rental exploitation, for example. The question whether to give that offer and build it into the code is a perfectly good question—there are strong arguments on both sides—and I want the consultation to help us to come to a conclusion on it.
	The position I have set out will be particularly significant for rent, because the consultation will propose that the guidance issued by the Royal Institution of Chartered Surveyors must be interpreted in the light of the principle I have described. The code will also need to be strengthened on areas such as gaming machines, but that is something else we can explore in the consultation.

Andrew Bingham: I welcome yesterday’s announcement, but will the Secretary of State concede that there are other issues where the relationship between the pubco and the tenant is biased one way? They include, for instance, portable appliance testing—or PAT testing—of electrical equipment in pubs and insurance, all of which are forced through by the pubco at above the market rate. I am concerned that the pubcos might inflate those things to cope with cuts in other areas of their income.

Vincent Cable: The hon. Gentleman is right. One of the problems that has occurred in the past is that any concession on beer prices would be offset by rent or vice versa. He is right that areas such as insurance are important elements of the package, and they would certainly be covered by the adjudicator.
	The proposed adjudicator will be based on the model of the groceries code adjudicator, which was approved by the House recently. I propose that the adjudicator will have the following powers and functions: to arbitrate disputes between large pub companies and their licensees; to carry out investigations based on complaints received; to have wide-ranging powers to require information from pubcos during an investigation and, when an investigation finds that a pub company has breached the code, to impose sanctions on it, including financial penalties in the case of severe breaches; to publish guidance on when and how investigations will proceed and how the enforcement powers can be used; to advise pub companies and licensees on the code; and to recommend changes to the code. The consultation will propose that the new adjudicator, like the groceries code adjudicator, be funded by an industry levy—in this case on the pubcos—with those who breach the code paying a proportionately higher levy. In order to place the most proportionate burden on business, my current thinking is that the new regulatory regime should apply to all pub companies with a tied estate of more than 500 tied pubs. As I have indicated to the House, we are currently talking about six operations.

Ian Lucas: Just to be clear, will the funding come from a levy only on the pub companies to which the code applies?

Vincent Cable: Yes, that is the intention. Our approach would target the companies with the greatest buying power and exempt smaller companies, about which very few complaints have been received. This, too, is a matter we want to pursue in the consultation.
	One issue that I would like to clarify relates to the beer tie. Some campaigners, and the motion under debate today, suggest that in order to be effective, we must mandate that all pub companies must offer a free-of-tie option with open market rent review. As I have just indicated to my opposite number, we have an open mind on that matter and will be happy to look at it during the consultation.

Toby Perkins: The Secretary of State must recognise that the fact that the original press release ruled out the free-of-tie option will cause some to believe that he is not approaching this matter with an entirely open mind. Will he explain how that happened?

Vincent Cable: All I can say is that the final version, which I approved and sent out, is the correct statement of where my colleagues and I stand on this.
	The evidence suggests that the tie, in itself, is not the issue. It is a valid business model that is used responsibly by companies large and small. It is clear, however, that in some cases the tie is being abused, just as many other business practices can be abused, and it is that abuse that we need to tackle, rather than the tie itself.
	There are good grounds for believing that the tie, as such, is not the problem. First, the number of pubs has been declining steadily. The Beer Orders in 1989 and the pubco consolidation in the 1990s resulted in relatively little change in the rate of decline. Secondly, the figures from the past three years, 2008 to 2011, show that the
	closure rate was lower in tied pubs than in free-of-tie pubs. That is the case regardless of whether we look at the gross or net closure rate, the latter of which takes into account churn by pubcos. Thirdly, the tie does not harm consumer choice. In fact, it sustains and supports the British brewing industry, a successful export industry that has more than doubled since the year 2000.

Martin Horwood: I echo what my right hon. Friend is saying about the tie. It has been a valuable source of investment for some pubs in my constituency, including the Royal at Charlton Kings and the Tivoli. The problem is in the power relationship between local landlords and the big pubcos. The “no worse off” principle is an interesting point of debate, but I would still advocate the free-of-tie option, and I strongly welcome my right hon. Friend’s openness to considering that option during the consultation.

Vincent Cable: My colleague is absolutely right to say that this is about power relationships and how we can prevent them from spilling over into abuse. As I have said, I have an open mind about the precise legal mechanisms that we shall use.

Greg Mulholland: Will my right hon. Friend look again at the Save the Pub document, which shows that the figures on pub closures are extremely misleading? He must recognise that they were paid for by the pubcos’ association, the British Beer and Pub Association. Many pubs have been reclassified on closure as being free of tie, having in some cases never operated as such. The figures clearly show that there are more free-of-tie pubs now than there were, and that tied business failure is huge—

Dawn Primarolo: Order. We must have brief interventions. Time is ticking on.

Vincent Cable: I would not want to cross swords with my colleague on the statistics, which he knows extremely well. He makes a compelling point.
	Returning to the issue of the success of the industry, and particularly the small companies, the Office of Fair Trading found in 2010 that the market share of microbrewers had increased between 2004 and 2008, and that the volume of sales had grown by something in the order of 50% in that period. We found out recently that the number of breweries in Britain had topped 1,000, which is the highest level since the 1930s. Furthermore, as well as the tie being essential to family brewers such as Charles Wells or Fuller’s, the OFT also found that large pub companies that owned tied pubs also bought a considerable volume from microbrewers and regional brewers. Accordingly, the Government’s proposals are designed to address abuses of the tie, through enshrining in the code the principle that a tied tenant should be no worse off than a free-of-tie tenant, while not impinging on the business practices of companies that are using the tie responsibly, as many do.
	This is an industry in which many companies behave well, in which seven out of 10 licensees would sign up again with their pub company and in which there are real examples of pub companies, brewers and tenants working together to invest for the future. Unfortunately, parts of the industry have acted irresponsibly in squeezing their tenants, resulting in considerable personal, as well as economic, hardship for those who lose out.
	That is why the Government are now going to consult on the strong, decisive step of introducing a strengthened statutory code that will address the balance of risk and reward, as well as an independent adjudicator who can investigate on behalf of tenants and impose sanctions on pub companies that persistently breach the code. As I said to the hon. Member for Hayes and Harlington (John McDonnell), I intend to publish the consultation soon. We hope that it will be completed in the spring and that it will be strongly welcomed by the House, as well as more widely by all those who work in, use or benefit from the pub industry.

Several hon. Members: rose —

Dawn Primarolo: Order. There is a five-minute time limit on all Back-Bench contributions, from now.

Adrian Bailey: Thank you, Madam Deputy Speaker—

Dawn Primarolo: Order. I beg your pardon, Mr Bailey. We need to be sure what we are talking about. The original Question is on the Order Paper, since when an amendment has been proposed, as on the Order Paper. The Question is that the original words stand part of the Question. In my haste to get the debate started, I omitted to say that.

Adrian Bailey: Thank you, Madam Deputy Speaker. I will do my best to ensure that I know what I am talking about.
	I welcome the debate and thank the Secretary of State for his letter to me yesterday and for his statement to the House. I want to clarify why we have reached this position and to give the House the history of the matter. There have been four Select Committee reports on this issue since 2004, and the one produced by my predecessor, the hon. Member for Mid Worcestershire (Peter Luff), was key to our reaching the current position. It stated that the industry was not making the progress to which it had previously committed itself to making, that it should be given a further year and that, if it had not made sufficient progress after that time, we should introduce a statutory code that would include provisions for the free-of-tie option and the open market rent review.

Peter Luff: I pay tribute to the hon. Gentleman for the way in which he has carried forward the flame so effectively in this Parliament, following on from his membership of the Select Committee during the previous one. Does he agree that the proposals we are debating today illustrate what can happen when Select Committees return to a subject again and again, rather than simply producing a report and letting the matter drop? His determination has paid dividends.

Adrian Bailey: The hon. Gentleman makes a valuable point. One of the most effective ways in which Select Committees can operate is to consider an issue, then monitor the Government’s performance and commitments on it time and again, so that at the end of the day, sheer pester power can prevail in getting the Committee’s
	objectives addressed. I want to make it clear that my Committee will certainly exercise such pester power in this instance.
	My Committee decided that insufficient progress had been made on this issue, and that a statutory approach was the only way forward. The Secretary of State had previously undertaken to accept the Select Committee’s proposals, and we were rather disappointed when we were rebuffed with the token gesture of an offer to place the existing code on a statutory basis. The Committee decided that that was insufficient, that it would not realise our objectives and that it would not address the problems we had identified.
	I subsequently applied for a debate through the Backbench Business Committee, which was heard almost exactly a year ago. I was tempted to go for a confrontational approach, but decided that we might command more support across the House if we gave ourselves a chance to see how the voluntary code was working. The House duly obliged by passing a resolution to the effect that, after so many months, a committee would be set up to review the working of the code. That was ignored by the Government, but I made it quite clear that the Select Committee would not ignore the matter. Indeed, when we questioned the Secretary of State in October, this issue was raised and he was questioned very forcibly about the progress that had been made. I give credit to him for acknowledging that the hoped-for progress had not been made and saying that he would take steps to look at the matter again. The commitment we have secured today is the outcome of that particular process. Let me repeat that this demonstrates what a Select Committee can do if it continues to apply pressure.
	All this is not due just to the role of the Select Committee, as a number of Members have shown a degree of commitment and tenacity on the issue to ensure that it never goes away. I mention the hon. Members for Leeds North West (Greg Mulholland) and for Northampton South (Mr Binley)—my colleague on the Select Committee, who unfortunately cannot be here today—and indeed the hon. Member for Cheltenham (Martin Horwood). That is to name just a few of a large number of Members who have continually lobbied on the issue.
	In congratulating ourselves on getting to this point, it is important that we do not assume that getting a statutory code of practice will solve all the problems. Some problems that the industry faces are beyond solving in any statutory code. None the less, such a code will go a long way to dealing with some of the sense of injustice felt about the unfair balance of the relationship between the pub companies and licensees. The key question is whether today’s proposals will deal adequately with that problem.
	Much has been said about the balance of risk and reward and the free-of-tie option. I am interested in the concept floated by the Secretary of State about the fair deal provision. It is very important that this is defined and well understood. Within the industry and among the licensees, there is a deep suspicion that a closeness with the Royal Society of Chartered Surveyors and sometimes the pub companies has led to artificially high rents, which has removed any advantage that the free-of-tie option might otherwise have had. This comes down again to the issue of getting a fair deal and the balance of risk and award. Without a transparent and
	accepted basis for rent reviews, the advantage of free of tie disappears. We could end up with a balanced relationship between tied and free of tie, with both being profoundly unfair when it comes to the balance between the pub companies and licensees.
	I welcome the opportunity for the Select Committee to contribute to dealing with those issues, and I welcome the Secretary of State’s commitment to be open-minded about the possibility of having a free-of-tie and open market rent review, but I come back to the point that we must have a transparent and robust process for rent reviews that can be accepted across the industry. This particular piece of legislation will not solve everything, but it will go a long way to doing so.

Sheryll Murray: The pub industry is exceptionally important to the British economy, contributing around £21 billion to the UK’s GDP and supporting about 1 million jobs. Pubs are often the only social hub for residents across the country, and they are often at the heart of local villages in my South East Cornwall constituency. I have kept in regular contact with the pub tenants in my constituency, and it is clear that they have struggled. Some pubs have already closed.
	One pub that has struggled is in my local village—the Devon and Cornwall inn in Millbrook. It was at this pub that I became the first Cornish MP to pull a pint during the all-party group’s campaign last year, and it is a prominent part of local village life. The former licensee, Mr Russell Ham, had to surrender his lease in May last year and be released from his trading obligations. Part of the reason for him surrendering his lease was that the Devon and Cornwall inn was tied to and on lease from one of the national pubcos, which applies to about half of UK pubs.

Henry Bellingham: I congratulate my hon. Friend on the role she has played in this campaign. Will she join me in paying tribute to CAMRA, which has been tireless in supporting the campaign, and to individuals such as Jeff Hoyle in my constituency who have been lobbying MPs, making the same strong case that she is reiterating?

Sheryll Murray: Absolutely. CAMRA has done a superb job in highlighting the issue to all politicians from all parties.
	About half of UK pubs are owned by pub companies—large property companies that lease pubs out to tenants to run as their own businesses. These pubs are contractually obliged to buy their beer only from the pub company, preventing pub licensees from buying on the open market, thus creating a monopoly. Russell Ham, the licensee at the Devon and Cornwall, was forced to pay a price for the alcohol he sold that was as much as 50% higher than he could have paid if it was sourced elsewhere—but the pubco insisted that he purchased it from them. However, the situation seems to be improving gradually. The voluntary code of practice is operational and the gap between those pub companies and some of the smaller more independent pub companies has been closing.
	I congratulate the Government on yesterday’s announcement about a new statutory code and an independent adjudicator to investigate disagreements between pubs and their owners. This is needed to ensure fair play among the biggest players in the industry, as the code will apply only to pub companies with more than 500 tied publicans. This ensures that small independent breweries are not unintentionally caught within the scope of the code. If Mr Ham were still running his pub, he might have been able to stay in business and even perhaps make a profit. In this way, the Government may well be able to save the livelihoods of thousands of people, including constituents of mine, so I would like to say thank you to the Secretary of State.
	However, we need to look at the business ethos of these large pub companies. It would be good for pub companies to operate like another of my constituents, Mr James Staughton, who is the managing director of the St Austell brewery. He operates a different business model to the pub companies, allowing his tenants to be a lot more flexible. He puts more emphasis on protecting and nurturing family breweries and traditional tenancy agreements. This is a genuine business partnership: even though it is still a business, it would not think twice before reducing the rent or even offering premises rent-free to a hard-working licensee who is genuinely struggling. Mr Staughton also operates a renewable three-year tenancy agreement that is a relatively low-cost way of setting up a business, and it requires less capital investment. Furthermore, a licensee can give him notice at any time and with no financial penalty. That is different from the large pub companies which offer long leases that are mostly much more expensive. If a landlord or tenant wants to sell the business, they will have to find a buyer mostly on the open market and agree a premium that is often far less than was originally paid.
	I understand that the changes were too late for Russell Ham, but it would be good for pub companies to operate with a more human face—like the St Austell brewery. Its pubs are thriving in comparison to others, and that is because of the genuine relationships with the licensees, which is what the larger pub companies are lacking.
	I also want to take this opportunity to congratulate the Government on putting small business at the very foundation of Britain’s economic recovery. In his recent autumn statement, the Chancellor announced that thousands of pubs will continue to benefit from paying no business rates, or a discounted rate, for another year, as the small business rate relief holiday has been extended to April 2014. That will be of great help to our local pubs, which we all want to succeed.

Gerry Sutcliffe: I am delighted to be taking part in this important debate. The beer and pub industries are an integral part of the DNA of the country and our heritage past and future, and pubs and clubs are part of our history. Personally, I see myself as more a practitioner than a theorist in these matters: I made my first visit to a pub at the age of 14, and as I approach my 60th birthday, I think that I have a wealth of experience on pub-related issues.
	I must caution the hon. Member for Burton (Andrew Griffiths), the chair of the all-party parliamentary beer group, against being too partisan. I believe that both the Secretary of State and my hon. Friend the Member for Chesterfield (Toby Perkins) have set out fairly the history relating to the difficult problem of pub companies, which has been caused by only a small number of them.
	There are many reasons for the closure of pubs over a number of years and, in particular, during the last few years. It has been largely due to the change in drinking habits and, indeed, the role of the supermarkets. We have yet to deal with the problem of the availability of cheap supermarket booze, which the last Government did not manage to sort out. People pre-load and then end up at the pub, causing problems. When pubs and clubs remove those people, they may be faced with a bill from the police, and may also find themselves with a reputation for inappropriateness that is, in fact, unfounded.
	Let me return to the subject of the pubcos. On Monday I received an e-mail from a constituent, who wrote:
	“I'm planting a seed of real concern re the future of the George & Dragon as a pub in Great Horton.”
	Great Horton is in my constituency.
	“The decision by Enterprise Inns to sell was announced over Christmas. The current licensees, who’ve been there over 25 years, are leaving end of January. It’s a grade 2 listed building. I read that Enterprise are in the process of reducing their number of pubs from 6,000 down to 5,200 over the next 3 years. Is there anything that can be done to keep this pub open, such an invaluable part of the fabric of life in Great Horton? I have been a resident of Great Horton for the past 30 years and a regular customer at the pub.”
	That is the real issue that we need to address. Pubs are continuing to close, and the pubcos will use the cover of time scales, consultations and the outcome of those consultations, which may require further action. Perhaps the Minister will be able to tell us whether primary or secondary legislation will be needed. It is important for us to know what process will be required for the introduction of a code of practice. Time is of the essence if we are to resolve this matter.

Nicholas Dakin: My hon. Friend is setting out the issues very clearly. There are 63 pubs in the towns and villages of my constituency, and I am keen to keep them there. Does he think that the action proposed by both Front Benches will be strong enough to prevent further closures?

Gerry Sutcliffe: I hope so. As has already been said, pubs close for more than one reason, but I am hopeful that the united approach that Members have taken today, and the pace at which the Secretary of State wishes to operate, will send the pub companies the clear message that we are watching what is going on and will take a dim view of any tactics that expedite matters before we can bring about the resolution that we want.
	When I was the licensing Minister, I worked on Cabinet Sub-Committees with my right hon. Friend the Member for Wentworth and Dearne (John Healey) in trying to find ways of stopping pub closures and—through planning legislation, for instance—supporting community pubs, particularly those in rural areas, because they were hubs that people needed for social activities. We must to try to retain as many pubs as possible, but there
	are difficulties involved. I met many tenants who had been abused by pub companies—that is the only way in which to describe it—and left debt-ridden by their excesses. If we can introduce fair rents, fair operations and free, without-tie opportunities, we shall be taking an important step forward.
	There are many successful pub company models: we need only look at Wetherspoon and Brewers Fayre. We must deal with the issue of binge drinking, but I believe that that is linked to pre-loading and supermarkets. There are responsible licensees and responsible brewing pub companies that operate ties properly. Such companies are many and varied in Yorkshire, Theakston being an obvious example. There are micro-breweries such as Saltaire and Salamander, in my constituency, which offer a wide choice of market opportunities.
	Urgency is the order of the day if the Department is to make progress. It is right that there should be consultation, but, as a former Minister, I know that time scales can slip, and that officials and others can come up with barriers and ways of halting the progress that politicians want to make. I hope that that will not happen in this case. I believe that the work of the Select Committees, the all-party beer group and the Save the Pub Campaign has brought us where we are today, and that today is a day for rejoicing. However, there is still a job to be done, and I hope that we can do it together as quickly as possible.

Andrew Griffiths: This is the second occasion in just a few months on which the House has discussed the plight of the brewing and pub industries, and as on the first occasion, some interesting and important contributions have been made.
	When I spoke in the debate organised by the Backbench Business Committee, I argued strongly in favour of self-regulation. I wanted to give the industry more time in which to put its house in order and get its act together. Clearly my argument did not win the day, but I advanced it for a particular reason. I felt not only that certain strides were being made and that at least some pub companies were beginning to get their act together, but that the self-regulation that had been proposed previously would protect all tenants—everyone in the industry who was running a pub. I fear that we are proposing legislation to tackle the actions of one or two companies, and I think that that is dangerous.
	I urge caution for two reasons. One is the fact that we are considering the creation of first-class and second-class pubs. We are considering intervening in the business model. We are proposing, through statutory regulation, to force “tied-lease” companies with more than 400 pubs to offer a fair deal. We are proposing to regulate the way in which their rents are set within their estates. However, another company with 380 or 450 pubs will not be regulated. I am not sure that the Government have thought this through in the context of competition and free markets. There are serious questions to be asked. If we want fair dealing for tenants, should we not offer fair dealing to all companies that own pubs? As I said earlier, there are 52,000 pubs in the country, and we are intending to introduce legislation that affects only some of them.

Jonathan Reynolds: The hon. Gentleman is expressing a principled and, perhaps, a minority view. Is he now suggesting that the threshold should be lowered from 500, as opposed to our not introducing statutory regulation at all?

Andrew Griffiths: The House is anxious not to overburden smaller pub companies, particularly family brewers, and I would caution against that. However, I do not think that we have fully thought through the consequences of what is being proposed.

Adrian Bailey: Do not the issues raised by the hon. Gentleman apply equally to the legislation on the groceries code adjudicator? Did he support that legislation? If so, why can he not support the legislation that is being proposed now?

Andrew Griffiths: I do not think that family supermarkets are an issue in this context.
	My second point relates to the self-regulatory code. What the Government are proposing is a two-tier system, with the big boys in the first tier. There is some confusion over what they mean by tied leases. The British Beer and Pub Association, for instance, thinks that this applies to two companies, Punch Taverns and Enterprise Inns. If the Government are talking about tied and tenanted leases, that is not what they set out in their press release yesterday, and it is not what the industry thinks that they are talking about. There is a need for the Minister to clarify what the Government are talking about.
	All tenants can now go to arbitration, but the arbitration system is funded by the industry as a whole, and large companies such as Punch Taverns and Enterprise Inns are paying the lion’s share of the cost of that self-regulatory body. Those companies will not be prepared to pay to be regulated twice: they will pay either for statutory regulation or for self-arbitration, but not for both, so I wonder what will happen to the self-regulation system. Have the Government talked to the industry about the implications of the big two or big six pulling out of funding the self-regulatory body? I also wonder how much pressure the industry will put on the smaller companies to sign up. I acknowledge that that is not such a big issue, but everybody has signed up to the self-regulatory code, and that pressure will dissipate if the Government’s new system is introduced. Legislation is being proposed in order to tackle one or two problem companies, but have the implications for the rest of the industry been fully thought through? I urge the Minister to address those concerns.
	There is another problem that our pubs and landlords face: the beer duty escalator. The amount of duty that brewers and publicans are paying is killing pubs and breweries. The biggest single thing we could do to help the industry is scrap the beer duty escalator. We have had a bit of a love-in with Opposition Front Benchers this afternoon, but it would be remiss of me not to point out the record of 13 years under a Labour Government. They increased beer duty by 60%.

Toby Perkins: I have in front of me a document from the House of Commons Library which shows the amount of duty as a percentage of retail price for each of the
	last 12 years. In 2000, 14.5% of the retail price of a pint of beer was duty, whereas the proportion is now 15.4%, so it has hardly gone up at all.

Andrew Griffiths: The hon. Gentleman must be the only person who does not think that the last Labour Government increased beer duty and introduced the beer duty escalator, and crippled pubs and the brewing industry as a result.
	My time is almost up, but I urge the Minister to think about what I have said.

Ian Lucas: I am pleased to follow the hon. Member for Burton (Andrew Griffiths), who made an interesting speech. He raised the issue of regulation, and the reason why this is a very important day is that the Government have finally decided to regulate in this area.

Ian Mearns: Today is an important day, but it is not as important as Friday will be. My hon. Friend will be pleased to know that on Friday a pub in the town he grew up in, the Schooner, is to be reopened by me.

Ian Lucas: I am certain that that shameless piece of publicity for the good citizens of Gateshead will be fully reported by the Evening  Chronicle. It is a great pleasure to be sitting beside my hon. Friend once again.
	We will now be regulating in this area, but Governments of all political parties have tried all along to avoid regulation. I used to have ministerial responsibility for regulatory reform, and some Members on the Government Benches may be surprised to know that even among Labour Ministers there is great resistance to introducing regulation. In that post, I always held to the principle that regulation should be a last resort, and that wherever possible we should use non-statutory codes instead.
	Where I beg to differ with the hon. Member for Burton is that I believe this is the time for us to regulate. The industry has had an enormous amount of time, and has been given every opportunity, to avoid regulation. It has failed to respond to the numerous opportunities that have been given. That is why the last Labour Government did not take the steps to regulate that this Government have suggested we should have taken. In passing, it is ironic that virtually the whole House of Commons is united with the honourable exception of the hon. Gentleman in favour of introducing regulation and legislation.
	We agree that regulation needs to be introduced because the voluntary approach has failed. That is certainly what I have been hearing for a long time from licensees and tenants in Wrexham. Indeed, it was said at a meeting I held in Wrexham last summer with my good friend, my hon. Friend the Member for West Bromwich West (Mr Bailey), Chair of the Business, Innovation and Skills Committee. We met local licensees and were told about the failure of the voluntary code. We were gravely disappointed when the consensus reached in the House was not followed through.
	The Secretary of State made a measured and sensible contribution today, which I welcome. The key issue is inequality of bargaining power between the pub companies
	and the licensees, and it is reasonable for Government to intervene. It is important that we encourage licensees and everyone else involved in the brewing industry to contribute to the consultation. Pubs are an important part of our local communities. There is strong demand for community meeting places, as the huge increase in the number of coffee shops in Britain over the past 10 or 15 years demonstrates. Pubs can meet that demand, too, if we get this framework right. We have all done a lot of work to get to the point we have now reached, but we must not lose hold of the ball; we must carry it over the try line and achieve a truly positive outcome.
	Wrexham Lager is a microbrewery that produces excellent local ale. That ale is served at the Bridge End inn in Ruabon in a neighbouring constituency, and the pub has been CAMRA pub of the year. Local micro-economies can grow as a result of brewers setting up locally and working with local pubs to produce local produce for local people to consume with gay abandon. That is the model we want to see.
	What is now happening is a great triumph for the House of Commons, and I pay tribute to everyone involved. This is a good day, and we should celebrate what has been achieved, but we must also make sure that we continue to take these matters forward.

Greg Mulholland: Yesterday was a great day for tied publicans, pub customers and the great British pub. The issue we are discussing is about business, community and justice. I pay tribute to my right hon. Friend the Secretary of State and the Minister, my hon. Friend the Member for East Dunbartonshire (Jo Swinson), for showing the leadership and courage to announce yesterday that they will introduce a statutory and strengthened code of practice for pub companies and an adjudicator.
	I also pay a very warm tribute to the hon. Member for West Bromwich West (Mr Bailey), and all the members of his Select Committee and predecessor Select Committees, including the former Chair, the hon. Member for Mid Worcestershire (Peter Luff), for the professionalism and leadership they have shown on this issue. I am sure that the hon. Member for West Bromwich West will agree that we should pay tribute to the Select Committee staff, who have done a remarkable job in uncovering the evidence and ensuring that Parliament has the information at its fingertips to make this sort of decision. I also pay tribute to the Department for Business, Innovation and Skills officials who, in a short time, have conducted the review that Parliament called for and have now come forward with the right solution based on the evidence. That is to be warmly welcomed.

Grahame Morris: While welcoming the Secretary of State’s announcement, what is the hon. Gentleman’s view on the tie-free option with an open market rent review?

Greg Mulholland: I thank the hon. Gentleman for that intervention, and I pay tribute to him for his work as vice-chair of the all-party save the pub group. Our group should be very proud of what we have achieved; I tabled my first early-day motion five years ago, so I rather regret that I have only five minutes to go through this.

Martin Horwood: May I join my hon. Friend in paying tribute to the hon. Member for West Bromwich West (Mr Bailey)? I am sure that the announcement will have come as some compensation for the shock defeat of Cheltenham Town by Everton earlier this week. One of the best things about the Committee’s work has been its willingness to return repeatedly to this issue and to check on progress. Is that not a very good model for other Select Committees to follow on other similar issues?

Greg Mulholland: Indeed, it is an exemplary one and it shows the power of Select Committees.
	Let us remind ourselves of the issue we are dealing with, because although it is often presented as complicated, it is a simple one: after years of self-regulation and twists and turns in this matter, the giant lease pub companies still continue to take far more than is fair or reasonable from pub profits. It is as simple as that; that is the issue that has to be dealt with. I will come on to address the point made by the vice-chair of the all-party save the pub group, the hon. Member for Easington (Grahame M. Morris), as to precisely how we should try to do that.
	Let us remind ourselves of the incredible figure from the Select Committee survey: 67% of lessees with a turnover of more than £500,000 were earning only £15,000 a year or less—that is a 3% return. I know, as I am sure a lot of right hon. and hon. Members do, that some pubco tied licensees have a reasonable turnover yet are making nothing at all. That is a scandal and it is closing pubs. This is a Department for Business, Innovation and Skills debate, but we must also remember that between 2009 and 2011 Ted Tuppen, the chief executive officer of Enterprise Inns, gave himself an £848,000 bonus package over three years, at the same time as the value of his company collapsed by 80%. This is one of the worst examples of irresponsible capitalism that this country has ever seen, and yesterday must signal the end of it—I hope that it does.
	We have recently seen the sale of Admiral Taverns. Has anyone noted that there has been a huge loss to the taxpayer, because of course that company had been bought by Lloyds TSB? The estimates of the loss to Lloyds, which is 43% owned by the taxpayer, are of up to £800 million. This is the economics of the madhouse.
	Let us remind ourselves that the Association of Licensed Multiple Retailers survey said that for the first time tied rents overtook rents for free-of-tie leases. The whole basis of the tied system was supposed to be that where more was paid for the beer, a lower rent would be paid as a result. The Select Committee, the ALMR and others have shown that that is simply not the case and that licensees are being doubly ripped off, paying higher than reasonable rents as well as exorbitant beer prices. That is, simply, why they cannot make a living.
	We need to be clear that the proposal being made is not red tape or bureaucracy; it is about freeing up the British pub sector. It is about freeing up small businesses to make the decisions to be able to succeed, and to get a reasonable living from their pub. It is notable that the proposal has had the full and professional support of the Federation of Small Businesses and the Forum of Private Business. I can name many examples of former pubco pubs around the country that have been taken on by smaller companies, by microbreweries and by individuals
	and are now succeeding. It has not been the pub that has not been viable; it has been the business model. Two such examples are the Horse and Farrier in Otley, a former Enterprise Inns pub that is now successful under the ownership of Market Town Taverns, an excellent Yorkshire-based pub company, and the Roebuck, just up the road, which is a pub that Enterprise Inns had run into the ground but is now a very successful pub run by local businessman Chris Payne. So it can be done and we want it to happen more. We want it to be a result of yesterday’s announcement.
	The pub companies we are discussing are zombie companies; they are not contributing to the British economy. Our concern should not be what happens to them; it should be what happens to the individual small businesses, because there is a huge growth opportunity in this sector if we can free up those licensees to be able to succeed because they employ people and buy things locally.
	The response to the announcement from the British Beer and Pub Association—the pubcos association—and from the pubcos has been extraordinary, if unsurprising. Amazingly, the BBPA has said that it is “disappointing” that self-regulation has not been given enough time “to work”. The reality is that the process has been as glacial as it had been when the Select Committee reported, the BBPA has been as impotent in getting self-regulation to work and there is still an impasse on those codes.
	The final thing—the big challenge—is how the Government deliver the principle that the tied tenant should not be worse off than if they were free of tie. They are taking on a considerable challenge, but it is the right one. Whether or not this approach succeeds depends on the Government getting that right, because having a code and an adjudicator, on its own, will not change the fundamental issue if the code does not deal with that matter. I believe—the all-party save the pub group will continue to campaign on this—that the best and easiest way of doing that is through the free-of-tie option with an open rent review. If the Government have other ways of doing it, we look forward to listening to them. Either way, they have to stop the overcharging and they have to save the Great British pub.

Nigel Evans: I must call time on you, Mr Mulholland—appropriately.

Paul Murphy: I am delighted to be able to take part in this debate, and I congratulate the hon. Member for Leeds North West (Greg Mulholland) on playing a hugely significant role in ensuring that the whole policy of the Government has changed on this issue. My hon. Friend the Member for Wrexham (Ian Lucas) made the very good point that this is a good day for the House of Commons. All-party groups have had some poor publicity in the past few weeks, but groups such as the one chaired by the hon. Gentleman provide an excellent example of how parliamentarians from both Houses and from right across the political spectrum can come together to change the law on such issues. The Select Committee, and my hon. Friend the Member for West Bromwich West (Mr Bailey) and the hon. Member
	for Mid Worcestershire (Peter Luff), played an enormously important role in 2004, 2005, 2009, 2010 and last year, so that is important, too.
	We must not forget that this is an Opposition day debate, and I pay tribute to my hon. Friend the Member for Chesterfield (Toby Perkins), who opened the debate with great skill and wit. He, too, has played a very important role in making sure that the decision has been changed—over the past couple of hours, not just the past couple of days.
	The biggest tribute must go to the landlords, who have approached us, their Members of Parliament. They have suffered under the scandal of the tie not only for years but for decades. In my constituency, Mr Phil Jones of the Open Hearth public house in Pontypool contacted me on the issue three years ago. I was not aware of all the detail, but he explained that we are dealing not with the tie of old—it is not the tie of a brewery such as Brains, the family brewery in south Wales—but with a much bigger issue and a much greater scandal.
	It is so important that MPs across the board have dealt with the issue, because the landlords who have come to us have shown great courage in putting their case. Today is a vindication of the work they have done as much as it is of that done by anybody else.

Jeremy Corbyn: The way my right hon. Friend describes local pubs in his constituency is excellent. In my constituency, we have The Alma pub in Newington Green, an excellent gastropub that makes no money at all because of the pub companies’ voracious appetite for money. Will it be possible to deal with the outstanding cases that the voluntary regulation system has failed under the statutory system?

Paul Murphy: One would hope so; I want to conclude on the question of how the consultation process will work.
	If we are dealing with a statutory code of practice, which we must be, as the voluntary one has clearly failed, its only significance lies in what is in it. It might be statutory, but if it does not cover the right things, it will be unimportant and meaningless. It must deal with the free-of-tie option and the adjudicator—and, of course, it must address the issues of scandalously high rents and beer that is too expensive. It must deal with that combination.
	How will the consultation process develop? The disappointing aspect of what the Government have done in the past—not of what they are doing or will do—is that they have effectively consulted only with the pubcos and have written out various documents that were effectively provided to them by the great pubcos. Clearly, that could not go on and the bilateral association between pubcos and the Government just was not right and proper. Now, the consultation must go much further. It must include the GMB, Unite, the Fair Pint campaign, CAMRA and, of course, the Federation of Small Businesses and others. It must not be simply a formal, paper consultation, either. It must be a proper consultation in which Ministers—not civil servants—sit down with all the organisations and take into account what they say and come up with something that will satisfy the points that Members across the House have put to the Minister today.
	I think everybody agrees that only a statutory code of practice will work. If it contains the sort of things that Members want and if the consultation is proper and valid, that will be good for pubs, good for our communities and good for our country.

Andrew Stephenson: I was pleased to contribute to the Backbench Business Committee debate on this topic on 12 January last year and want to make a further brief contribution today.
	I am a great fan of the British pub, as you know, Mr Deputy Speaker, and I live next door to a pub in my constituency—as you do in the neighbouring constituency. Since the general election, I have worked three shifts behind the bar in various pubs in my constituency to learn more about the challenges they face.
	In my speech last year, I talked about the situation in Pendle over the past few years. We have seen seven pubs close in Brierfield, five in Barnoldswick, seven in Nelson, three in Colne and numerous others in the surrounding areas. In that debate, I said:
	“I believe that there is increasing evidence that the beer tie, as operated by the large pub companies, plays a significant role in the decline of the pub trade. I point out explicitly that I am referring only to the behaviour of some large pub companies that own more than 500 pubs, not to family-owned breweries, which tend to act much more responsibly.”
	I concluded by saying that, although I normally always favour voluntary regulation over statutory regulation,
	“I therefore have no hesitation in supporting the motion and calling on the Government to reconsider self-regulation and stop the large pub companies abusing their position.”—[Official Report, 12 January 2012; Vol. 538, c. 367-8.]

Henry Bellingham: I congratulate my hon. Friend on the role he has played in this campaign. Does he agree that another initiative the Government should consider is scrapping the escalator in the 2013 Budget? That would save the Government money, because any loss in beer duty revenue would be offset by higher beer sales and increased revenue from employment taxes. Surely the Government should consider that, too.

Andrew Stephenson: I agree wholeheartedly with my hon. Friend. I was very pleased that when we came into office we scrapped the increase in cider duty arranged by the previous Government, but I am even more delighted that many hon. Members on both sides of the House are now urging the Government to go further and to scrap completely the beer duty escalator.

Bob Stewart: May I suggest considering another discrepancy—that supermarkets that sell beer should perhaps pay duty at a different rate? As my hon. Friend the Member for Burton (Andrew Griffiths) suggested earlier, in Ireland they are considering what they call a lid tax, which would encourage people to use pubs rather than preloading on cheap booze from supermarkets. Does my hon. Friend the Member for Pendle (Andrew Stephenson)agree with me?

Andrew Stephenson: I agree and think that idea should be considered. I am perhaps in a minority on the Government Benches, in that I support some of the proposals to consider minimum pricing for alcohol,
	because that would leave unaffected the prices charged in our pubs but tackle those charged by our supermarkets, many of which use alcohol as a loss leader to drive people through the doors. I have spoken to NHS bosses in east Lancashire who also agree with the proposals. Minimum pricing would boost public health and support the pub trade.

Hugh Bayley: I, too, took part in the debate a year ago and I proposed a minimum price for alcohol. In my most recent survey of pubs in my constituency, I put the issue to landlords. Some 97% agreed; 48% thought that a level of 50p per unit was right; and 48% thought that that was too low.

Andrew Stephenson: I thank the hon. Gentleman for that intervention. When I talk to landlords across Pendle about the biggest impact on their business—whether the smoking ban or pub companies—they all say that it is supermarkets selling alcohol at below cost price. Although today’s debate is important, we must not lose sight of other issues leading to a decline in the pub trade across the UK.
	I warmly welcome yesterday’s Government announcement, which will provide great support to those who have campaigned on the issue and give stability for pubs and tenants. It will be good for growth and the pub trade. I also welcome the fact that the Government are focusing just on large pub companies with more than 500 pubs; that is exactly what I argued for in my speech last year.
	The Government have already done a lot to support the industry. They have appointed a Minister for pubs and introduced the community right to buy, so that residents can take over and save failing pubs, as happened with The Greyhound in Barnoldswick. I welcome the reform to licensing laws to make it easier for pubs to play live music and the action on business rates. There are issues on which we can go further, such as the beer duty escalator, but a lot of progress has been made. Those steps, along with those announced yesterday, will be welcomed by tied publicans across Pendle—especially the overarching fair-dealing provision in the new code and the principle that a tied licensee should be no worse off than a free-of-tie licensee.
	The new statutory code for the industry will need to get the balance right. I am not against all pub companies or even the big ones; the beer tie is a valid business model with real advantages for many. However, the abuse of the tie has led to real problems so I warmly welcome the Government’s action.
	I conclude by paying tribute to CAMRA’s work on the issue. I look forward to seeing several of the east Lancashire branch members at the ninth Pendle beer festival, which runs from 31 January to 2 February at the municipal hall in Colne. If any hon. Members want to come and try any of the huge variety of ales, such as Barlick brewery’s Magic Badger, Reedley Hallows brewery’s Old Laund bitter or the classic Moorhouse’s Pride of Pendle, they will be more than welcome.

Susan Elan Jones: It is a great privilege to follow the hon. Member for Pendle (Andrew Stephenson) and speak in this hugely important debate.
	History was made on 29 October 2011 at the Buck House hotel in Bangor-on-Dee, when Wrexham lager was officially relaunched. Wrexham lager is Britain’s oldest lager brew, first brewed in 1882. The company went through a huge array of changes until in 1992 it became part of Carlsberg-Tetley. Eight years later, the brew suffered from a faraway management decision that allowed Wrexham lager to continue being brewed, but nowhere near Wrexham. In 2002, the brew ceased totally. Its current incarnation is testimony to the work of a few dedicated individuals, including my predecessor, Martyn Jones, who was a microbiologist at the brewery.
	It is vital that we encourage diversity in brewing and bring in the statutory code, because of small breweries such as the one that produces Wrexham lager. Today there has been much discussion about the number of pubs that have closed. One such is the Ty’n y Capel pub in Minera in my constituency, a hostelry with a heritage going back to the 13th century. The pub has now closed but people in that small village are determined to get it reopened. They have been awarded a lottery grant and local residents are busy purchasing shares. It is now our job, and the job of Government, to support them in reopening this vital community facility.
	As the hon. Member for Pendle said, there is rightful concern about the abuse of alcohol and binge drinking. This concern is as valid today as it was in any previous generation. That is partly why this debate is so important, because only by supporting genuinely local community and family-oriented pubs can we tackle the most unpleasant aspects of the revolting all-you-can-drink subculture that has led to devastating consequences, not least domestic violence.

Robin Walker: The hon. Lady is making a very interesting point. Does she agree that some of the problems with the binge-drinking culture lie particularly with the very high-strength alcohols? Will she join me in urging the Government, who have already looked at differential duties, to consider a lower duty on ordinary beers that are sold in the pub and a much higher duty on the very highest-strength alcohols that often lead to some of the problems of domestic violence and binge drinking?

Susan Elan Jones: There is a very strong case for that; the hon. Gentleman makes an interesting and a good point.
	I could not speak in a debate such as this, and I modestly have not yet done so, without mentioning with great pride the Bridge End pub in Ruabon, to which my hon. Friend the Member for Wrexham (Ian Lucas) referred. It was last year’s CAMRA pub of the year, and it has just secured another prestigious award—it is now Welsh pub of the year for 2013. It has renowned quizzes and local brews, and it not only brings together our local community but has become part of the tourist experience for everyone who visits the uniquely beautiful part of north Wales that I feel privileged to represent. That is an amazing achievement for a pub that reopened only in 2009. It is a great tribute to the pub, to the McGivern family who run it, and to Ruabon.
	It is because of the Ty’n y Capel, the Bridge End, Wrexham lager and the Buck House hotel, as well as the need to take alcohol out of the abuse zone, that we need
	to regulate the relationship between large companies and their tenants and licensees. It is vital that we do that now, and it is so good that the House has spoken on this issue.

Mark Spencer: There are a few things that unite this House, such as national security, respect for the monarch, the bravery of our armed forces, and the great British pint. Nottinghamshire has a great tradition of pubs and brewing. The city of Nottingham boasts some of the oldest pubs in the country in the Salutation Inn and Ye Olde Trip to Jerusalem, but Sherwood has its own place in brewing history with Robin Hood and Friar Tuck, who was a noted brewer, so I feel very close to this issue. Sadly, though, Nottinghamshire has not been immune from the pub closures that we have seen across the country, and a number of great local hubs have disappeared from our villages and communities.
	It is worth noting how important those establishments are to local communities. They are a great place not only to hold community events but to celebrate weddings and christenings and perhaps even to commemorate the passing of a close friend. More importantly, they are a place where people can share their woes and problems with friends and neighbours. They provide a great outlet for any social pressures that people may be feeling, in a location where there is a landlord to control the amount of alcohol they consume and to make sure they do not do it in a way that will cause them harm. We must recognise how important this great British institution is—and it is a British institution. Many Members will have gone abroad and seen how other countries attempt to recreate the British pub and how poorly they do it. It is something that we should be very proud of.
	There are great examples of success in the pub industry. In my local communities there are not only great pubs but great miners’ welfare and working men’s clubs that have shown the way forward when they are given the freedom to operate successfully. It is worth noting that both the bottom and top clubs in Calverton have created a system in which they can operate, and the miners’ welfare club in Blidworth has linked to a sports club. Those are great examples of how successful they can be when given the freedom to operate.
	Successive Governments of all colours have not always helped the pub industry. Whatever the motivation behind the decision to introduce the beer duty escalator, it put pressure on some landlords and built in costs to the industry that it inevitably had to pass on to consumers, and that inevitably drove some of them away to drink at home rather than at a public house.

Stewart Jackson: My hon. Friend is making a good contribution. Does he agree that, because of the prescriptive nature of the Licensing Act 2003, the proliferation of convenience stores—unlicensed premises—has meant that pubs have been disadvantaged, and that a new cumulative impact policy will mean that pubs will now have a fighting chance against convenience stores that sell alcohol?

Mark Spencer: I thank my hon. Friend for his intervention. I do hope that that will be the case. As I said in my initial comments, it is important that people are able to drink in a social environment where someone is there to
	keep an eye on what happens. That is a much healthier way of drinking than sitting at home in front of the TV drinking cans of lager. We should ensure that we continue to support public houses and landlords.
	Governments have not offered assistance to public houses with other pressures, such as their rateable value. Some of the larger pub companies have used the value of a public house to increase the rents and the price of beer in a deliberate ploy to push out landlords and realise the capital value of that property, in order to knock it down and build housing or retail premises. I can only imagine the pressure felt by landlords when they are exposed to a deliberate plan to push them out.

Greg Mulholland: My hon. Friend makes a hugely important point—asset stripping has been a big issue. Does he agree that we also need to consider increasing protection in planning law for pubs, so that asset stripping does not continue? There is a danger, now that the pubcos know the game is up, that they may seek to sell more.

Mark Spencer: It would be worth looking at that. Some of the older public houses are of great historic and architectural value, so perhaps somebody should be looking at ensuring that they are protected.
	There are some good news stories as well. The tied pub system offers an opportunity for people to become self-employed and set out on the career path of working for themselves. When it works well, it works very well, but we need to tackle those who are abusing the system. There is some discussion about how many companies are doing so. I want the Minister to consider, as part of the consultation process, lowering the threshold for the number of pubs held before they are brought into the realm of the proposed legislation.

Jessica Lee: Will my hon. Friend give way?

Mark Spencer: I am very short of time, but I will give way quickly.

Jessica Lee: I am grateful to my hon. Friend for giving way. On self-employment, does he agree that the growth and resurgence of the microbrewery industry goes hand in hand with this debate? It is flourishing, particularly in Erewash and across Derbyshire.

Mark Spencer: I agree and it is a great success story. Lots of people are setting up microbreweries and they need marketplaces in which to sell those beers. If someone is in tied premises, their hands are tied and they cannot do that. Greater flexibility in the marketplace would be welcomed and would support those people.
	There are a number of examples of landlords taking on a pub that has been run down and putting in a lot of graft and work by making food available on the premises, doing quiz nights and increasing the amount of alcohol and beer they sell, only to find their rents and beer costs being pushed up so that the more successful they are, the more costs are thrown at them. It has become counter-productive.
	In summary, the Government have a pretty good track record of starting to address these problems. I pay tribute to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East
	Dunbartonshire (Jo Swinson), who is pushing the Groceries Code Adjudicator Bill through the House. A system similar to the groceries code to protect landlords will be welcomed. I welcome the consultation and look forward to greater protection for our pubs in future.

Fiona O'Donnell: May I take the opportunity to wish you a very happy new year, Mr Deputy Speaker?
	It is a pleasure to follow the hon. Member for Sherwood (Mr Spencer). I am sure that such a benign and jovial fellow is not usually given to conspiracy theories, and he was right to highlight some of the darker practices, such as tenants being deliberately forced out of a lease in order for the pubco to benefit. He was also right to highlight the positive role that good landlords can play in helping people to develop a healthy relationship with alcohol.
	I pay tribute to Members on both sides of the House who have stuck doggedly with this agenda, even before many of us arrived in 2010, to get us to this point. In particular, I praise the role of the Business, Innovation and Skills Committee. I regret that the Scottish National party Member only popped into this debate for a short time, because there is a lesson for the Scottish Government in how effective genuinely empowered and independent Select Committees can be in promoting good governance. I hope that some SNP Members are watching the screens in their offices and will take that message to heart.
	So far, I have been in quite a jovial mood, considering that I am just 60 hours into nicotine withdrawal. The Secretary of State today showed that he has the sensitive underbelly of the Government. He did not seem happy that there was criticism of the time that it has taken to get to this point—like many Members, I stood here almost a year ago asking for effective regulation of this sector—but it really is his own fault. When he was a real Lib Dem—rather like the Campaign for Real Ale—he prided himself on calling for the quick introduction of stronger regulation of the banks. Whereas he would probably give himself a 10 for his foxtrot when it came to the banks, we might score him slightly lower on his gentle waltz towards the effective regulation of this sector. I hope that he has not left the Chamber because he was so sensitive that he was struggling to cope with the criticism.
	I pay tribute to my hon. Friend the Member for Wrexham (Ian Lucas) for talking about the contribution that pubs make to so many of our communities. The Winton Arms is the only pub in the village where I live in East Lothian and it is very important. It is developing in the way that my hon. Friend spoke about. It now has space for a hairdresser, where beauty therapy is also available, and it hosts a coffee shop with home baking. Members can guess which of those two I tend to spend more time on. At new year, when little public transport was available, I was able to go there to see in the new year safely and walk home.
	It has been a wasted year. In that time, many of us, including the hon. Member for South East Cornwall (Sheryll Murray), have seen landlords finally give up on a relationship that just was not working. That has happened at the Tyneside Tavern in Haddington in my
	constituency. The landlord, Neil Forbes, an ex-policeman who ran a superb operation, has finally given up. I have attended meetings with Neil and his wife, and have been copied in to an endless stream of e-mails. The experience reminds me of the cartoon “Tom and Jerry”, in which Tom gets a bump on his head, he pushes it in and one pops out on the other side. Neil would make some progress getting fairer terms in one area, but then Scottish & Newcastle would suddenly introduce a charge in another area and set the situation back. Although I deeply regret that he is walking away from the business, I understand the effect that it was having on him and his family.
	The Government were a little late in finally agreeing to make the Groceries Code Adjudicator Bill a real Bill with the power to deliver change. I hope that they will not be so reticent this time, but will realise that if we are to have fairness in this sector, we need comprehensive regulation with real teeth.

Justin Tomlinson: It is an honour to be the last Government Back-Bencher to speak—it is a bit like queuing for last orders. As a member of the all-party save the pub and beer groups, I welcome the debate. I have shown my hand at trying to run a pub, not particularly successfully, and like many Members who are present I have been known to frequent a pub.
	It is a real credit to the Government that we now have a Minister responsible for pubs, and if he ever wishes to visit our local brewery, Arkell’s, I will certainly make him welcome. I am a little concerned, however, because we have a passionate shadow Minister who supports pubs but has announced that he is teetotal for the month of January, and the shadow Minister in the February 2011 Westminster Hall debate, the hon. Member for Derby North (Chris Williamson), declared not only that he was teetotal but that he did not visit pubs. We need the other team to play their part. However, there is clearly cross-party concern about pubs, which are at the heart of our communities.
	Although the number of pub closures has slowed, it is still somewhere in the region of 18 a week, which has to act as a wake-up call for all of us. The Government’s decision is a credit to organisations such as CAMRA and the Federation of Small Businesses, and to the countless local residents who have e-mailed all MPs to raise the issue.

Mark Menzies: My hon. Friend is a champion of pubs in Swindon, but may I urge him also to give some focus to rural pubs, which are under greater pressures than those in towns? I see that every day in Fylde.

Justin Tomlinson: I thank my hon. Friend for raising that important issue. That situation arises particularly because of the value of rural pubs if their owners transfer them to other categories of use. It is welcome that the Government are looking to tighten up the relevant planning rules, which will help protect a number of rural pubs. A few in my constituency need that protection.
	I welcome yesterday’s announcement in principle. The new code will ensure fair practices on a number of issues, including rents and the price that publicans pay for beer. Crucially, the adjudicator will manage the matter of fairness, because it is often the big guy against the little guy, and just because someone is good at running a pub, that does not mean that they are a legal expert.
	We must not forget the absolute need for transparency on costs, particularly when a publican signs up to their deal. It is a bit like having a franchise. Legally the deal says, “You will buy the product at this price,” and as my hon. Friend the Member for High Peak (Andrew Bingham) said, it includes matters such as PAT testing of vending machines and insurance. It is not just about the beer.
	I urge caution, and my hon. Friend the Member for Burton (Andrew Griffiths) made a good and sensible speech that brought some realism to the debate. We have to be careful not to throw the baby out with the bathwater. We must be careful about mandating a free-of-tie option with open market rent review, because the pubco tie is a good business model that allows people to become entrepreneurial small business owners without having to have huge savings to buy an expensive building. Just because some have abused the system, that does not mean that we should completely remove it. We just need to ensure that those who abuse it are dealt with and that others are given adequate protections.
	We all have good examples of family breweries working with landlords, such as Arkell’s in my constituency, which has just over 100 pubs. It is in breweries’ interests to do so, because if their landlords succeed, they will continue to sell beer, which is what makes their business thrive. We have to look at the wider picture and be careful not to chase a cheap headline. I support the principle of what is proposed, but we must act on the consultation. Those with expertise, knowledge and first-hand experience should feed into it. The hon. Member for Wrexham (Ian Lucas) made that point, and I echo it.
	We must also celebrate some of the examples of good news. Wetherspoon’s continues to buck the market trend and expand. When I am having breakfast in a Wetherspoon’s pub, I often admire how much money they probably take before the majority of other pubs open their doors at lunchtime.
	The Government are considering the community right to bid, giving communities a fairer chance to bid to take over pubs. Again, that would be particularly useful in rural communities. They are launching a £19 million support programme to help community organisations; ensuring that planning policies provide for the use of pubs and guard against their unnecessary loss; and providing help with business rates. They have scrapped the previous Government’s plan for a 10% rise in cider duties, but they now need to do the same in the case of the beer duty escalator. As we chase increased exports, let us take a moment to rejoice that 1.25 billion pints of beer were exported last year. That is something to which we can all raise a glass.
	We are making it easier for pubs to play live music. I have carried out a number of surveys with local pub users, asking what makes a good pub. We know that society has changed and that more often than not, pure straightforward drinking pubs will struggle these days. Pubs need a combination of good food, good entertainment, live music and pub quizzes—going that extra mile to
	make it a destination for local communities. Moves to exempt pubs from unnecessary health and safety inspections would also be welcome. I urge people to get behind this issue, which has clear cross-party support, and engage with the consultation. Let us hope for a better year for the pub industry in 2013.

Simon Danczuk: I thank my hon. Friend the Member for Chesterfield (Toby Perkins) for championing this cause and pressing for and securing this debate. Hon. Members may not be aware that I have spent a considerable amount of time researching this subject over many years—perhaps too intensely on some occasions—and I wish to draw on some of that research by telling a story about Mary Spence, a publican in Rochdale who runs the Hunters Rest just off Syke common. One reason I am telling Mary’s story is because it addresses a point raised by Simon Townsend, the chief operating officer at Enterprise Inns. On 12 December he said in the Publican’s Morning Advertiser that all he had ever asked was to be provided with
	“clear evidence, which we can pursue to see whether we have done something wrong,”.
	Well, I believe the way Mary Spence is being treated is wrong and that Mary’s story provides clear evidence that Enterprise Inns has little, if any, regard for customers at the Hunters Rest and indeed the wider community. I believe that Enterprise Inns is doing something wrong; it may not be illegal, but it is certainly wrong. I have been in the Hunters Rest on a few occasions and I can tell it is a well run pub. Mary and Tom work exceptionally hard; they start at six or seven in the morning and finish after midnight. They keep a smart, clean pub that provides bed and breakfast and pub food. Indeed, Hilary Devey, one of the entrepreneurial dragons on the BBC’s “Dragons’ Den”, worked at the Hunters Rest while filming “The Secret Millionaire” for Channel 4, but even such an accomplished entrepreneur as she could not work wonders under the arrangements of Enterprise Inns and I will explain why.
	Mary Spence is 16 years through a 25-year lease with Enterprise Inns and she has had enough. Enterprise Inns controls most of the business—it sets prices, determines what work should be done on the property, sets the rent and decides what beer should be sold. For example, Mary could buy a 22-gallon barrel of Foster’s for £195 but she has no choice but to pay Enterprise Inns £291. She could buy Carling wholesale for £201 but has no choice but to buy it from Enterprise Inns for £303. That affects not only Mary Spence but her customers. Therefore, when Mr Townsend asks, “What’s wrong?”, it is that Mary Spence is paying around £500 a week extra for her beer.

Lilian Greenwood: Will my hon. Friend give way?

Simon Danczuk: I will not take interventions because I am conscious of the time. The other big problem with Enterprise Inns is that Mary has to maintain the property both inside and out. She had to pay for a fire escape to be fitted and for fire alarms throughout the building. She has invested her life savings in that pub over the past 16 years, but although the place is immaculate, what does she have to show for it? Enterprise Inns is
	doing all it can to ensure that she leaves the pub with as little financial return as possible. Mary pays an inflated rent but gets nothing done to the property. She pays inflated prices for beer but gets nothing in return. Last Friday, the regional manager of Enterprise Inns said that he could not even guarantee her a packet of beer mats! Mr Townsend asks what is wrong with his business model. Those are the things that are wrong with it.
	I am pleased the Government have moved on the statutory code, but I have concerns about the tied option, which should be kept open, and about open market rent reviews, which the Minister should consider.

Hugh Bayley: My wonderful city of York has been an important tourist destination for centuries. People are drawn to the city by its history and its wonderful buildings, including York Minister and the city walls, but also by the city’s pubs, some of which date back to the 1400s.
	When I meet York members of the Licensed Victuallers Association and York CAMRA, they always raise the problems of pub companies. Like other Members, I carry out a survey from time to time of pubs and clubs in my constituency. When I did so in 2009, I found that 41% of landlords blamed pub companies’ unfair terms of trade for their falling profits, but last year when I carried out a similar survey, I found that the number of pubs complaining about pub companies had risen to 62%. The problem of the pub companies misusing their power is getting worse.
	After conducting last year’s survey, I wrote to the Treasury. I told the then Treasury Minister, the hon. Member for Norwich North (Miss Smith), that pub companies had not abided by guidelines and that the Government should consider introducing a statutory code to regulate pubcos’ relationship with their tenants. In July, she replied:
	“Regarding your comments on the relationship between pub companies and licensees…The Government does not…consider it appropriate to make a statutory intervention in setting the terms of commercial, contractual relationships.”
	I congratulate the Government warmly on changing their policy and agreeing to a statutory code of practice.
	Pub companies came into existence after a previous attempt by the Government of the day to deal with the problem of tied pubs—I believe it happened following the beer orders of 1989. Breweries were instructed to sell off their tied pubs, which were bought by pub companies, but that did not solve the problem, because the pub companies imposed a tie of their own. The tie is the problem. In the new regime that the Secretary of State announced yesterday, the tie must go.
	If a property company with a shop sought to lease it as a boutique, for example, with a term in the lease that it could sell clothes from a particular manufacturer or of a particular brand only—or sell clothes supplied only by the landlord—the Office of Fair Trading would rule it out of order pretty quickly, and yet that is exactly the relationship between a tied pub and a pub company. I congratulate the Business, Innovation and Skills Committee on its work. It has argued forcefully for a statutory code for pub companies to include a free-of-tie option, which the Labour party motion supports.
	Parliament needs to avoid making the mistake it made in 1989 when the brewers were required to sell their tied pubs. I am pleased to see the Secretary of State in his seat listening to the debate. The statutory code he proposes should start from the presumption that there is no tie. I hope that option is covered in the consultation. If we say to a relatively weak and powerless small businessman or woman that, under the code of practice, there should be an option of no tie, many will still be bludgeoned by big, tough multi-million pound pub companies into taking a tie. Therefore, the default should be that there is no tie unless it is opted for by the landlord. I hope we consult on that basis.

Andy Sawford: We are pressed for time and other hon. Members want to speak, so I will truncate my remarks on what is an important debate.
	I want to mention the role of local breweries in my constituency. Dick Simpson runs the Nene Valley brewery in Oundle, which started brewing in 2011. He told me that pubcos make it very hard for pub owners to show initiative. If pubs start to make a handsome profit, the pubcos whack the rent up so the landlord sees little of the extra cash. Local breweries, such as the Nene Valley brewery, the Great Oakley brewery, Rockingham Ales and many others in my constituency, would benefit from being able to sell to all the pubs in my area. Indeed, everybody would benefit: the pubs, the consumers, the local brewers, the local economy, the environment—because it would reduce beer miles—and tourism.
	In autumn last year, I was delighted to welcome my hon. Friend the Member for Chesterfield (Toby Perkins) to my constituency for some active research in my local pubs. He came to some of the rural pubs, such as a beautiful pub in Stanwick, and to the thriving pubs in Corby town. He also saw, however, that many of my local pubs are struggling. Some have closed down already; some may face closure in the near future. One reason for that, as has been said, is the profoundly unequal relationship between tenants and lessee landlords. In the past, if a pub owner was tied, he paid more for the beer but had the benefit of discounted rent. As we know, pubcos have increasingly put up both the rent and beer prices.
	I will make my remarks even briefer than I intended. There are two critical issues on which I want to press the Front Bench. I recently sat on the Groceries Code Adjudicator Public Bill Committee, and we know that the role of the Bill’s proposed ombudsman will only be as strong as the code itself. One of my questions relates to the power to fine, on which the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) gave a big concession on that Bill. The power to fine in yesterday’s announcement is only where there are severe breaches. I would like to know how broadly the Government might define “severe breaches”. If the definition is too limited, this code will not have sufficient teeth.
	My concluding point is that I, of course, agree with the tests that my hon. Friend has set out, in particular the principle that a tied licensee should be no worse off than a free-tie licensee. That does not go far enough: I want a tie-free option.

Andy Slaughter: I am grateful to my hon. Friend the Member for Corby (Andy Sawford) for being collegiate. I wish other hon. Members had been. I will be as brief as I can.
	My constituents, Joe and Betty Hynes, are observing the debate. They are also active in the all-party group, the Guild of Master Victuallers and the fair pint campaign. They are also known to the hon. Member for Leeds North West (Greg Mulholland), as well as hon. Friends on the Front Bench, because for 23 years they have lived and worked at the Old Parr’s Head in Blythe road in my constituency, which is a very fine public house. In 1997, it was bought by Punch Taverns. A few years’ ago, Joe and Betty Hynes acquired a second pub, the Chancery in Fulham. They did that because they wanted to be successful in business and to provide employment. Unfortunately, when they had to surrender the licence of that pub this year, Punch Taverns was taking 124% of their profits. Six years’ ago, Punch Taverns was taking 48% of their profits on their existing pub. This year, save for any agreements that Punch Taverns will keep to, which it is not showing much sign of doing, it will take 91% of those profits. That will mean that Joe and Betty will effectively be living on less than the minimum wage. They have lost their life savings in one venture, because they have been forced out. They are now living on minimum income, yet have provided those two fantastic establishments for my constituents over a long period of time.
	The Secretary of State indicated that there have been many pressures on pubs, such as the beer duty escalator, the smoking ban and unfair competition. Trying to deal with those problems is bad enough. If, in addition, pubcos decide that they will take none of the risk or any cut in their profit and put all of that burden on to publicans, we end up in the situation we are in now, where people are being driven out of business and pubs are going bankrupt every week in my constituency. I will, of course, try to intervene as the MP, but it is sometimes difficult to do so in a contractual dispute.
	I end on this point, and I wish I had more time to do justice to Joe and Betty’s case. I hope, having seen delay and more pubs going to the wall than is necessary, that there will be the quick implementation of an effective statutory code so that this David and Goliath battle can be evened up and people like Joe and Betty can get the proper reward for a lifetime of work and service to their community.

Several hon. Members: rose —

Nigel Evans: Order. I apologise to Members who have not got in, despite having sat here throughout the debate, but we have to move on to the winding-up speeches.

Ian Murray: I also apologise to the Members who have not got in, because they have an important contribution to make to the debate, particularly the hon. Member for Easington (Grahame M. Morris). To Members who have not had a night out with him, I can highly recommend it, and I was looking forward to his contribution. Perhaps we will find time
	later on. I also refer the House to my entry in the register of Members’ interests, as a former licensee of a pubco and other companies. I will run through some of my own experiences shortly.
	This afternoon’s debate has emphasised the importance of the great British pub and the contribution that landlords and landladies make to our communities in every country of the United Kingdom. I would like to pay particular tribute to the hon. Member for Leeds North West (Greg Mulholland), who, since I have been in the House, has been a dogged campaigner on this issue, filling our inboxes on the subject. He deserves great credit for everything he has done, and today is a great triumph for him, as well as for everyone else in the House.
	I also pay tribute to my hon. Friend the Member for West Bromwich West (Mr Bailey), the Chair of the Select Committee, who has continued to pursue the matter through the Select Committee, showing the power that those Committees can have in the House. I hope that other Chairs will take note. If anyone has time to read the contribution from the hon. Member for Northampton South (Mr Binley), who is not in his place, and his robust performance against the pubcos in the Committee, it is certainly worth looking at. And, of course, I pay tribute to my right hon. Friend the Member for Wentworth and Dearne (John Healey), who did a lot in this field as the former pubs Minister, and to the hon. Member for Mid Worcestershire (Peter Luff), the former Chair of the Select Committee.
	I also add a special tribute to my Front-Bench colleague, my hon. Friend the Member for Chesterfield (Toby Perkins). By bringing this Opposition day debate to the Chamber, he rang the last orders bell on the Government to act. Without that determination to get this issue back on the agenda, I suspect we would not be here today with the progress that has been made. Despite his dry January, he does a lot personally to support the industry—although he could do a lot more by standing his round a little more often! Given that it is a dry January for him, however, I shall certainly be buying the drinks after this debate.
	Just 12 months ago, we had a robust Back-Bench debate on this issue and the House agreed unanimously that the self-regulation approach should be reviewed and a statutory code considered. It is clear, however, that consecutive BIS Ministers have ignored the wishes of the House and have refused to listen to the broad coalition of groups calling for action. To give credit to the Secretary of State and his Ministers, however, on the eve of this debate, he said that the current system had failed and that he would introduce a new statutory code.
	It is worth reflecting again on the scale of the issue: 46% of tied publicans earn less than £15,000 a year. Crucially, that includes more than 50% of lessees with a turnover of more than £500,000 per annum—a return of only 3%. The total number of tied pubs has fallen by more than 3,000 since 2008, which compares with an increase in the number of free-tie pubs. Furthermore, as many hon. Members have mentioned, including my hon. Friend the Member for Bradford South (Mr Sutcliffe), the Wetherspoons model demonstrates that profits and sales can continue to rise in what is a difficult market. It would seem that the abuse of the tied contract is the problem, as many publicans will already be paying rent at the market value or higher.
	I shall give some examples of my own experience. I was in discussions about a premises in Edinburgh, but was concerned that the same company had a managed house just around the corner that had been closed for some time. I was told that it was to have a full refit and reopen shortly, but would be a niche product and would not be in direct competition with my premises. When it eventually opened, it was an almost identical offering and was selling beer to the consumer at less than the value at which I could buy it from the same company.
	In another premises, albeit with a different landlord, we asked if we could buy out of our bottled beer tie, because a supermarket had opened up next door and was selling the same products at a third of the price that we were contracted to buy them for. We were told that we could buy out of the tie, but at a cost of £1,600 per annum on the rent. Many hon. Members, including the hon. Member for Pendle (Andrew Stephenson), have raised the issues with off-trade and on-trade. That might be a subject for a useful future debate.
	My last and probably most shocking example from that time—this issue has also been illustrated by my hon. Friend the Member for Corby (Andy Sawford) and the hon. Members for Sherwood (Mr Spencer) and for Leeds North West—concerns the major pubco that I rented a hotel from. We received a good deal for the hotel because the premises were up for demolition, but the pubco told us—and I quote—that any increase in our profitability or trade would be reflected in a regular, upward-only rent review. Crucially, the business development manager at the time used to brag about the list of tenants he was fining or about to fine for “buying out”—the term for purchasing products outwith the contract. He got a bonus for fining people. That was the reality of the situation at the time and shows just how much pressure tenants were under.
	Let me quickly give the House another example. I did a bit of analysis today. I phoned up a supplier and, with no credit history, asked how much I could buy a 36-gallon barrel of standard lager for. I was quoted £356.73. The list price on Enterprise’s current price list is £510.22, so it is quite clear where the problem lies.
	I warmly welcome the new Minister to her place. She has changed her mind on a number of issues, including fining and the groceries code adjudicator. I am delighted that she has come with some proposals today that might make the situation better. We were on the verge of having a groceries code adjudicator without teeth. I hope that she has learnt that lesson and that we do not end up with a G and T with all tonic and no gin. I also want to challenge her on what “no worse off than a free-of-tie licence” means. Does it mean no worse off in terms of profitability, turnover, overall cash or, indeed, the whole package of measures?
	I do not have time to run through the other issues, but I want to highlight some of the statements made by other Members. My hon. Friend the Member for East Lothian (Fiona O’Donnell) spoke of how her local pub had diversified into other things, such as a beauty salon, and challenged us to suggest whether she spent more time there or in the bar. Given her natural beauty, I would suggest she spent more time in the bar. My hon. Friend the Member for Hammersmith (Mr Slaughter) gave an interesting analysis of Punch Taverns, which is now taking 124% of profit, rather than the 41% from
	some time ago. The story of Mary Spence, which my hon. Friend the Member for Rochdale (Simon Danczuk) told us about, emphasises how bad the industry can get.
	On the eve of this debate the Secretary of State panicked, but he has announced stuff that we will be accepting on this side of the House, although we will monitor the progress of the code’s development closely to ensure that, as the Prime Minister would put it, it does exactly what it says on the tin. I am sure that many hon. and right hon. Members who have spoken today may be getting a free pint in their local pub, given the amount of free publicity they have given them. I am off to do a pub crawl around all those pubs after this debate and you are very welcome to join me, Mr Deputy Speaker.

Jo Swinson: I thank all Members who have contributed to this afternoon’s debate. We have heard speeches from 18 Members and interventions from many more.
	I particularly thank the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey), and his predecessor, the hon. Member for Mid Worcestershire (Peter Luff), for the work they have done on this issue over many years, which is a good example of the effectiveness of Select Committees working in a persistent, constructive and responsible way. Many other Members have campaigned on this issue for many years, including the hon. Members for Northampton South (Mr Binley) and for Easington (Grahame M. Morris), my hon. Friend the Member for Leeds North West (Greg Mulholland), who made a typically powerful contribution to today’s debate and has done so much with the all-party save the pub group, and my hon. Friend the Member for Cheltenham (Martin Horwood), who introduced a private Member’s Bill a couple of years ago. I also thank the many thousands of constituents up and down the country who have taken an interest in this issue, whether as landlords or, as the hon. Member for Bradford South (Mr Sutcliffe) put it, “practitioners” of pubs.
	In what was a generally consensual debate, the hon. Member for Chesterfield (Toby Perkins) proposed potential court action. I can reassure him that it is not necessary, because The Morning Advertiser corrected the article that had incorrectly attributed quotations to me. I can confirm to the House that I did not say that the self-regulatory approach was working.
	Today we have heard stories from Members in all sorts of constituencies of publicans who have faced real injustice and unfairness—horror stories about rent hikes out of kilter with the market, about extra charges and add-ons that they did not know about when they signed up and about people who have been driven out of business. For me, one of the most shocking figures is the comparison between the incomes of tied lessees and of those publicans who are in non-tied leases. Almost half of tied lessees earn less than £15,000 a year. That is an astonishing figure, when we consider the long hours that people put into running their pubs, and the fact that that income is often shared by a couple. The figure
	for non-tied lessees earning less than £15,000 a year is 22%, or one in five. The Government will be acting on this, and I welcome the broad cross-party support for what we are doing.
	We have heard some horror stories this afternoon, but there have also been some lighter notes in the debate. We have heard about pubs being the scene of a range of events. The hon. Member for Rochdale (Simon Danczuk) mentioned the “dragon”, Hilary Devey, working undercover in a pub. My hon. Friend the Member for South East Cornwall (Sheryll Murray) talked about being the first Cornish MP to pull a pint in her local pub. My hon. Friend the Member for Pendle (Andrew Stephenson) talked about the three shifts that he had done as a barman in his local pubs, and told the House about the Pendle beer festival. I understand that you also have a pub as a neighbour, Mr Deputy Speaker. We heard from the hon. Member for Clwyd South (Susan Elan Jones) about the triumph of the Bridge End winning CAMRA pub of the year, and the hon. Member for Chesterfield told us about his drinking mineral water in his local pubs. Perhaps the most touching story was that of the romance and engagement of the hon. Member for Ashfield (Gloria De Piero).
	The Chair of the Select Committee rightly said that what we are doing will not be a panacea, but it will help. Members raised a range of other issues, including the beer duty escalator, on which we had a debate in the House recently. That is a matter for the Chancellor, and I am sure that Treasury colleagues will be following this debate closely through Hansard.

Andrew Griffiths: rose —

Jo Swinson: I am sorry. Owing to the lack of time, I must press ahead with my summation.
	A differential beer duty was suggested, but it would not be possible to introduce such a scheme on the basis of where alcohol was being sold. However, the Government have already acted on a differential duty in relation to the strength of beer. In October 2011, the duty on high-strength beer rose and the duty on low-strength beer fell. My hon. Friend the Member for Pendle made an important point about minimum pricing, which could help pubs to regain an advantage when competing against low-priced supermarket booze.
	My hon. Friend the Member for Burton (Andrew Griffiths) said that regulation might not be needed. That might not be a popular argument today, but I understand what he is saying. It is right that the Government should regulate only as a last resort, and that we should seek alternative solutions first. We have sought solutions, however. The industry was put on notice last year and, sadly, it has not delivered. My hon. Friend also mentioned his concern about a two-tier system. It is right that we should focus regulation on those with the greatest market power. That is proportionate because the evidence shows that the greatest problems are in that part of the industry.
	As my right hon. Friend the Secretary of State mentioned, the consultation sets out that that regulation would relate to the six largest pub companies, with a threshold of 500 tied or tenanted properties. Those companies would be Punch, Enterprise, Marston’s, Greene King, Admiral and Star. Our consultation will listen to views on what the right definition should be and what the threshold should be. I hear the point made by my
	hon. Friend the Member for Sherwood (Mr Spencer) that the threshold should be lower than 500. I encourage hon. Members who have a view on those issues to contribute to the consultation.
	There has been much debate on the free-of-tie option this afternoon, and there are arguments on both sides. The hon. Member for York Central (Hugh Bayley) said that the tie must go, but I believe that the beer tie can be important, especially for small family breweries such as those mentioned by my hon. Friend the Member for South Derbyshire (Heather Wheeler). Indeed, in January 2011, CAMRA stated:
	“Without the right to tie pubs, the Family Brewers wouldn’t bring their beers to the bar. Closures amongst the smaller brewers would be inevitable. The tie is a viable way for them to run their pubs.”
	The problem is not the tie, as such, but the abuse of the tie.

Toby Perkins: Will the Minister give way?

Jo Swinson: I will give way briefly; I am conscious that I must respond to the debate.

Toby Perkins: There has been a great deal of cross-party agreement in the debate, and many people will be watching it on television. Will the Minister confirm that she will support our motion, so that we can all work together and ensure that we get to where we want to be?

Jo Swinson: I can confirm to the hon. Gentleman that we will support the amendment, which does something that his motion does not do—namely, it proposes the introduction of an adjudicator, on which the Government are going to consult. I believe that that is essential, but it is missing from the hon. Gentleman’s motion. However, I welcome the fact that he has brought this topic forward for debate today.
	“A new independent statutory code of practice should be imposed to uphold the prime principle—that the tied tenant should be no worse off than if free of tie”.
	Those are not my words, but those of the Independent Pub Confederation. That is the key principle on which the new statutory code should be based. This will be looked at across the board—taking into account the profits, the prices, the insurance, other benefits and the rents—and the adjudicator will be able to look at the whole picture. Having higher beer prices mitigated by lower rents and business support is a valid business model, but having higher beer prices and higher rents is just a rip-off. As the right hon. Member for Torfaen (Paul Murphy) said, the combination of the two is what causes the problems.
	Let me deal briefly with the process and timetable. The Government propose a consultation of six weeks, and we will publish it as soon as possible in the spring. The adjudicator would have to be established by primary legislation, and we are keen to press ahead with the timetable. The House’s support will be helpful in that regard. We will consult on the details in the consultation, and I encourage those interested to ensure that they set out their views. To respond to an earlier query, the consultation will include the future role of self-regulation and of the Pubs Independent Conciliation and Arbitration Service. The power to fine, which the hon. Member for
	Corby (Andy Sawford) mentioned, is certainly envisaged for severe cases, which will of course be decided by the adjudicator.
	In conclusion, we want to build a stronger economy and a fairer society, and the Government’s action on pubs will help to achieve both objectives. It will create a stronger economy because pubs are an important part of it, and this will help them to thrive. As for a fair society, pubs are also an important part of our communities and this action will help to put a stop to lessees being treated unfairly by large companies and to abuse of the beer tie. This is good for publicans, good for pubs and good for the public.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
	The House divided:
	Ayes 246, Noes 311.

Question accordingly negatived.
	Question put forthwith (Standing Order No. 31(2)), That the proposed words be there added.
	Question agreed to.
	The Deputy Speaker declared the main Question, as amended, to be agreed to (Standing Order No. 31(2)).
	Resolved,
	That this House recalls its Resolution of 12 January 2012 on pub companies; recognises that a wide body of experts share the view that only a statutory code of practice and an independent adjudicator will resolve the contractual problems between the pub companies and their lessees; calls for a statutory code, which would enshrine in law both an overarching fair dealing principle and the fundamental principle that a tied licensee should be no worse off than a free-of-tie licensee; and believes that the consultation will establish how best to do this, as well as producing proposals for a strong adjudicator with the power to arbitrate disputes, investigate breaches of the code and impose sanctions, including financial penalties for the most severe breaches, as soon as is practicably possible.

Rising Cost of Transport

Maria Eagle: I beg to move,
	That this House believes the rising cost of transport is adding to the financial pressures facing many households; notes that the Government failed to honour its pledge to cap this month’s rail fare rises at 1 per cent above inflation, resulting in some fares rising by as much as 9.2 per cent; recognises that this was a direct consequence of the Government’s decision to give back to the private train operators the right to increase fares by up to an additional 5 per cent beyond the increase set by Ministers; further notes that bus fares increased on average by more than twice the rate of inflation in 2012; calls on the Government to ban train operators from increasing fares beyond strict limits and to rule out the proposed introduction of a new category of super peak ticket which would increase the burden on hard-pressed commuters; and further calls on Ministers to support transport authorities pursuing Quality Contracts to bring accountability to bus fares, instead of using Better Bus Area funding to penalise authorities seeking to get better value for money for these taxpayer-funded services.
	I begin by thanking and paying tribute to my hon. Friend the Member for Barrow and Furness (John Woodcock), who has decided, because of a head injury, to step down from his duties on the Front Bench. He has been an excellent, hard-working colleague, full of ideas, and I thank him very much for all the work he has done in my team. I know that he will be back.
	The cost of transport is rising; it is rising by more than the rate of inflation—by much more in many cases. That increase is being fuelled by an out-of-touch Government and Transport Ministers who just do not seem to understand the pain they are imposing on hard-working people. Returning to work after the new year, those who commute by rail found that the price of their tickets had increased by an average of 4.2%, and by as much as 9.2% on some routes. Over the past year, bus fares have increased by more than twice the rate of inflation and motorists have found that VAT at 20% wipes out any relief they have had from the deferral of increases in fuel duty. Yet most people are not seeing their wages go up by anything like as much as those increases, and for many their wages or salaries are stagnant or falling.

Marcus Jones: Does the hon. Lady not acknowledge that if her party were still in government and fuel duty had been 13p a litre more than it is today under this Government, bus fares would have increased even more?

Maria Eagle: The hon. Gentleman knows that his Government have cut the bus service operators grant by 20%. As for any policies that a re-elected Labour Government may have carried out on fuel duty, it is just speculation to say that they would or would not have been cut or kept; it is completely speculative to suggest that there may not have been any changes in the intervening two years—

Marcus Jones: Will the hon. Lady give way?

Maria Eagle: No, I think once is enough.
	Together with the rising costs of housing, fuel and food, the rising cost of transport is adding to the cost-of-living crisis now making life much tougher for households across Britain. Yet Transport Ministers and
	the Government are so out of touch with the pressures that families are under that they are making it easier for private train companies and bus companies to hike fares and increase their profits—

Henry Smith: Will the hon. Lady give way?

Maria Eagle: I will in a moment. These companies are doing that off the back of struggling commuters and passengers. The pain is not yet over. This year, we are set to see even greater pressure from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel.

Andrew Gwynne: Is not the really sneaky thing the Government’s allowing train companies to regain the power of so-called “flexibility”, which enables them to increase rail fares by up to 5% on top of the regulated fare increase? The Labour Government removed that power from them in 2009.

Maria Eagle: My hon. Friend is entirely correct. Even now, this Government could put that right by simply removing that power from the train companies, as we did in office. I invite the Secretary of State, who is relatively new to his job, to consider that.
	We have Transport Ministers and a Government who are so out of touch with the pressures that families are under that they are making it easier for the private train and bus companies to hike fares and increase their profits off the back of struggling commuters and passengers.

Henry Smith: Will the hon. Lady give way?

Maria Eagle: I will give way to the persistent hon. Gentleman.

Henry Smith: I am grateful that my persistence has paid off. Will the hon. Lady acknowledge the considerable investment in rail? For example, my constituency has a £26 million upgrade of Three Bridges station, a £53 million upgrade of Gatwick station and extra rolling stock from Thameslink and Southern. The travelling public are seeing real improvements.

Maria Eagle: I acknowledge that that over a number of years, under the current Government and the previous Government, there has been big investment in rail travel. That is a good thing and I do not deny that.

Stephen McCabe: I want to point out that the situation is not uniform. In my constituency, London Midland has sacked the people who work in the ticket office and installed machines and CCTV cameras that do not work. Despite a promise made by the Secretary of State to the House in a recent statement, there is no evidence that security has been improved at all.

Maria Eagle: My hon. Friend is correct. Significant problems are occurring with London Midland’s handling of its franchise. I know that Ministers are considering that and I hope that they will be tough and ensure that the passengers—

Norman Baker: We are.

Maria Eagle: We will wait and see what action the Government take before we conclude that they are being tough—I am just encouraging them to be tough.

Daniel Kawczynski: Will the hon. Lady give way?

Maria Eagle: I want to make a little progress, but I might allow the hon. Gentleman to intervene a little later.
	The pain is not over yet. This year is set to see even greater pressures from the rising cost of transport as the Government unveil their rail fares and ticketing review, with proposals for even higher fares at the times when most people need to travel. Ministers are to reform bus funding in a way that, deliberately it would seem, will penalise transport authorities that seek to regulate bus fares in the way it already happens in London.
	In contrast, as we set out in our motion, Labour would be taking steps now to ease the pressure on those who rely on our public transport system, standing up to the train and bus companies on behalf of commuters. We would be on the side of passengers, not vested interests.
	Last September this House debated rail fares, and to the frustration of commuters—and many on the Government Benches, judging from what they told their local papers—the Prime Minister marched his MPs through the Lobby to oppose Labour’s motion to cap fare rises at 1% per cent above inflation. Of course, Liberal Democrat MPs were marching alongside them. Yet within a month of Tory and Liberal Democrat MPs voting down Labour’s attempt to help commuters, we had a U-turn. On the eve of his party conference, the Prime Minister finally said that he agreed with Labour, and pledged to cap the annual fare rise at 1% above inflation. As commuters found when they returned to work this month, however, that was yet another broken promise from this Prime Minister and this Government, because fares were capped not at 1% above inflation, but at 9.2%. The reason the Prime Minister could not honour his pledge to commuters is clear: he was simply unable or unwilling to stand up to the vested interests in the private train companies. They had lobbied hard before the last election to get an agreement that the Conservative party would give back to them a power that had been taken away by the Labour Government when times got tough—the right to turn the annual cap on fare rises into an average, turning a cap of 1% above inflation into fare rises of as much as 9.2%.

Patrick McLoughlin: I am surprised by what the hon. Lady says. She said that the previous Labour Government took that power away from the train operators when times got tough. Will she confirm that times got tough in 2010, which coincided with a general election?

Maria Eagle: No. There was a rule change that would have applied each and every year after the decision was made. Lord Adonis, who was in post at the time as Transport Secretary, took that decision and had been absolutely clear about it. If anybody in the House
	doubts that, they can read the Select Committee on Transport report on rail fares and franchises, published in July 2009. Lord Adonis told the Committee:
	“The Government's intention is, therefore, that in future the cap should apply to individual regulated fares, not just to the average of each fares basket.”
	He did not say “for one year” but “in future.” As Lord Adonis reaffirmed last year, when the issue came up:
	“It was my firm intention to continue the policy for subsequent years, and I was mystified when…my successor”—
	that is, the right hon. Member for Runnymede and Weybridge (Mr Hammond)—
	“reinstated the fares flexibility. The only people who supported this change were the train companies.”
	I do not therefore accept that the cap was a one-off or that it would not have continued into the future under a Labour Government.
	How have the Government reacted? The Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), told passengers to stop complaining because fares are
	“not nearly as expensive as is being presented”,
	and then told peak-time commuters that they were paying for a premium service. I assure the Under-Secretary that many passengers do not feel that that describes their experience in getting to work in the morning on an overcrowded train. They do not agree with him that fares are not expensive.
	Meanwhile, it was revealed that the hon. Gentleman’s colleague, the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), was avoiding taking the train altogether, and had a chauffeur bill to and from his constituency—a commute that would take just half an hour by train on a season ticket that would cost taxpayers not £80,000 a year but £4,500 a year. Transport Ministers—

Daniel Kawczynski: rose—

Maria Eagle: No, I will make some progress. We have out-of-touch Transport Ministers and a Prime Minister not willing to enforce his own commitment on fares.

Simon Burns: rose—

Maria Eagle: I will give way to the Minister.

Simon Burns: Will the hon. Lady withdraw the accusation that she has just made—that the service to Chelmsford cost £80,000? If she had done her homework or was being fair, she would know that pool cars cost the Department a flat rate of £80,000 for the year, regardless of how many journeys they make or how far they travel. Even if the car stopped coming to Chelmsford, the flat fee would still be paid at the same level.

Maria Eagle: I note the right hon. Gentleman’s attempt to argue that he is actually saving money for the taxpayer, and I will leave that for those who wish to report on these things to decide.

Daniel Kawczynski: I am rather disappointed that at the start of the hon. Lady’s speech she did not acknowledge that there had been significant increases in rail fares
	under the previous Labour Administration. Her argument would hold more water—we are all concerned about rising prices—if she had acknowledged that that had happened under her Administration as well.

Maria Eagle: I do acknowledge that there were rail fare rises of RPI plus 1 under the previous Labour Government, but when times got tough after the global banking crisis and financial crash, the last Government acted to protect commuters. As households struggled, we immediately changed the rules to force train companies to apply strictly the cap on train fares. That was 1% above inflation, not the up to 9.2% that we have seen this year. That rule change would have applied each and every year from then on—

Gareth Johnson: rose—

Maria Eagle: If the hon. Gentleman allows me to answer the point put to me, I might consider giving way to him a little later.
	Putting train companies before commuters is what this Government are doing; when times got tough, we acted to try to support commuters. In future, if we get the chance, we will restore the rule and put it into law so that passengers will always know that the cap on fare rises set by Ministers is the one they see at the ticket office.
	As I have said before, I believe that the previous Labour Government should have been bolder in taking on the train companies and they should have done so sooner, but the important fact is that we acted when times got really tough. This Government are just clobbering commuters even more.

Marcus Jones: Will the hon. Lady give way?

Maria Eagle: No. I wish to make a little progress.
	I think I have answered the point made by the Minister of State. If he is trying to argue that paying for a car is saving money because he is not having to pay for commuter rail fares, that is extraordinary.

Marcus Jones: rose—

Maria Eagle: No, I will not give way to the hon. Gentleman.
	Buried in the innocuous-sounding Government paper “Rail Fares and Ticketing Review” is a plan to introduce a new category of ticket—the super-peak ticket.
	It proposes
	“a ‘high-peak’ fare priced higher than the current Anytime day fare/a season ticket priced higher than the current season ticket.”
	So a commuter who is already paying thousands of pounds for their season ticket faces this year being told that their very expensive purchase is not valid on every train, even if they have no choice about when they have to get to work, and most people do not have that choice. With a captive market, train companies will be allowed to hike fares even higher than they are now on services that suffer the most overcrowding and where there is already no guarantee of a seat. Only this Government would think that the answer to overcrowding on our
	trains is to price all but the richest off those services. The Defence Secretary gave away this Government’s view of the railways when he was Transport Secretary—“a rich man’s toy”, he called them.
	When these tickets are introduced, an even nastier shock is awaiting commuters because the Government’s paper includes modelling on how much the cost of these new super-peak tickets could rise each year. Here is what the Government chose to include in their paper as apparently the favoured option:
	“some fares (in the high peak) rising by an additional 7% annually (an additional 40% over the course of five years)”.
	So there it is in black and white: new super-peak tickets introduced, with their cost then rising by 7% a year and 40% in just five years. We agree with the Transport Committee, which last week in its report, “Rail 2020”, urged the Government to
	“rule out forms of demand management which would lead to even higher fares for commuters on peak time trains”.
	The Secretary of State should take the opportunity of today’s debate to do just that, and I hope he will. If he does not, Labour will oppose any attempt to penalise commuters with new super-peak tickets.
	The Government are not only hiking the cost of travelling by train but making it harder to buy the cheapest fare by supporting the campaign for the private train companies to close ticket offices or reduce their opening hours. The Government’s paper, “Rail Fares and Ticketing Review”, says:
	“Ticket offices are the most expensive way of selling tickets…Train operators will be expected to reduce their costs and this is one important option they will want to consider…it may not be possible or appropriate for ticket office opening hours to continue at current levels.”
	It may well be inconveniently expensive for the train companies to have to employ staff to sell tickets to their passengers, but it is one of the best ways for many customers to ensure that they purchase the cheapest ticket, not least when we have a ticketing system so complex that it can be very confusing. Surely decisions should be made on the basis of what is least expensive for passengers, not what is least expensive for train companies.
	We know that Ministers do not plan on listening because we have seen leaked e-mails from the Department for Transport showing that plans to close ticket offices are already well advanced. This is what one official said in an e-mail to the Department’s press office advising it on what it could say on ticket office closures:
	“We can’t say that the Government has no plans to close ticket offices because we have an application from London Midland where the minister has already decided to approve some ticket office closures (it’s just not been announced yet…and there will be more of those in the future.”
	When I first read that out last year during Transport questions, the Minister, the hon. Member for Lewes, said that the official must have been mistaken as he had not approved any ticket office closures. Yet weeks later it was announced that the Minister had indeed approved London Midland’s plans to close some ticket offices and reduce the opening hours of others, despite the company’s abysmal performance in recent months which has caused such misery for passengers. What is even more revealing in the leaked e-mail is that it shows how
	the Government intend to pass the blame for those closures on to the train companies. This is what the official told the press office:
	“your way of slipping in there that the initiative comes from the TOCs”—
	the train operating companies—
	“not us is very neat.”
	So that is the Government’s plan for fares and ticketing: ticket prices rising by as much as 9% every year; more expensive new super-peak tickets which mean that season ticket holders will not even be able to get on every train without paying up to 40% more than other passengers over the next five years; and new freedoms for train companies to close ticket offices, making it harder for passengers to get the best deals. What a contrast with the ideas to make fares and ticketing fairer and simpler that we have heard as a result of listening to passengers during our policy review process.
	Those ideas include a clear definition of peak and off-peak, to prevent passengers from facing massive extra charges on the train because it was not clear when peak time ended, and to prevent train operators stretching their peak time to stretch their profits at the expense of passengers. Another is a legal right to the cheapest ticket, so that passengers are offered the cheapest deal available, with rights to refunds if they find that they were mis-sold a more expensive ticket.
	Another idea is a more flexible way for passengers to change travel plans so that if, through no fault of their own, they just miss a train and have an advance ticket, they can take the next train without incurring a massive new fare on board. Another is a right to a discount for a rail replacement bus service, because if your train, Mr Deputy Speaker, becomes a bus, which usually results in a longer journey, it should be treated in the same way as a service that is delayed for any other reason. Finally, it is suggested that there should be a cap on annual increases in station car parking charges, because it is increasingly clear that some train companies are squeezing yet more money out of hard-pressed commuters by whacking up parking charges when we should be making it easier for people to leave their car at the station and commute, because by doing so they are helping to cut congestion and helping the environment.

Gareth Johnson: Will the hon. Lady give way?

Henry Smith: Will the hon. Lady give way?

Maria Eagle: No. Those are the changes to fares and ticketing that passengers want, not the Government’s approach, which seems to be more about what is in the best interests of the train companies, not commuters.
	If the Government are out of touch with the impact of fare rises on commuters, Ministers are even more woefully out of touch with the consequences for bus fares and services of their funding decisions since the election. When they set out plans to cut 28% of funding from local transport and axe a fifth of the direct support for bus services, Ministers claimed, incredibly, that that could be done without an impact on fares. The Under-Secretary of State for Transport, the hon. Member for Lewes, told the House:
	“When I spoke to the industry following the spending review announcement, it indicated that the cut was so minimal that it
	hoped that it could absorb it without fares having to rise, which is what we hope will happen.”—[ Official Report , 2 December 2010; Vol. 519, c. 953.]
	What incredible naivety.
	For the subsequent two years, those who rely on local bus services have had to listen to the Minister, with his fingers in his ears, denying all knowledge of the consequences of the cuts. At Transport questions last April, he said of bus services that
	“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]
	At Transport questions in November, he again refused to accept the truth when my hon. Friend the Member for Nottingham South (Lilian Greenwood) warned him of the higher fares and reduced services in communities up and down the country.
	We now have the truth, because the Government have had to publish the annual bus statistics for 2011-12. They clearly show an average increase in bus fares of 6.5% in England and an even higher average increase of 7.6% in non-metropolitan areas. Those are increases of more than double the rate of inflation on services that are relied on by some of the poorest in our communities.

Angela Smith: Will my hon. Friend consider whether the impact of those increases will be felt by young people in particular, who have to pay high fares to get to college and to work and who are suffering a great burden because of the increases being visited on them by the Government?

Maria Eagle: My hon. Friend is right. The Government’s own statistics also reveal the truth on lost services. Directly contradicting the Minister’s claims, they show that between 2010-11 and 2011-12, mileage on supported services dropped by 10% in non-metropolitan areas in England and by 7% in metropolitan areas.

Bill Esterson: My hon. Friend’s point about lost services is crucial to those who live in villages in my constituency, particularly older people who do not have another option for transport. They face higher transport costs because there is no bus service any more. I am sure that my hon. Friend will agree that that is a consequence of what she is saying.

Maria Eagle: My hon. Friend is correct in explaining the experience that his constituents are living through. These are not just statistics, but the loss of actual services. Research by the Campaign for Better Transport has found that 41% of local authorities have been forced to cut services that are socially necessary and the support that they give them. That is on top of the cuts from the previous year, when one in five local council-supported bus services were cut or cut back. A tenth of councils have had to cut more than £1 million from support for bus services.
	The Government’s own watchdog, Passenger Focus, has warned that the reduction in those services will impact disproportionately on
	“older people, less affluent households, those with health related issues, or households containing teenagers”.
	I hope that Ministers will accept that they cannot remain in denial any longer about the impact of the cuts to bus services—cuts that could have been avoided in their entirety just by using the Department’s underspend
	from last year, which Ministers handed back to the Treasury. Ministers need to explain to parents why they are having to struggle with the extra costs of getting their teenagers to college. They should explain to pensioners why the Prime Minister’s election pledge to protect their bus pass did not extend to protecting their local bus services, leaving many with a bus pass but no bus on which to use it, thereby reducing their access to shops and vital services and increasing their isolation.

Gareth Johnson: I am very grateful to the hon. Lady for giving way. Clearly, bus services, train services and transport systems have always had to be paid for in some way or another. Does she feel that most of the burden should fall on the passenger or on the taxpayer?

Maria Eagle: The hon. Gentleman has missed out the profits of rail and bus companies. Perhaps those ought to be looked at as well. As he knows, all Governments have to strike a balance. This Government have to do so, as did the previous one, and that will no doubt be the case for the next one too.
	Because bus services outside London were deregulated, local authorities have for far too long been unable to limit fare rises or properly plan the network of local bus services in the interests of passengers and economic growth in their area. That is why the last Labour Government changed the law to enable transport authorities to use quality contracts to move to a tendered model for bus services, thereby bringing accountability over fares.

Kwasi Kwarteng: Will the hon. Lady give way?

Maria Eagle: No.
	That model means that decisions on fare rises are made by politicians, just as we have always accepted should happen for rail fares and as has happened for bus services in London. However, the integrated transport authorities that are rightly going down that route are finding that they are up against the vested interests in the private bus companies. Stagecoach is the worst culprit and has threatened to close depots, sack drivers and take buses off the road overnight. Sir Brian Souter claimed that he would rather “take poison” than enter a quality contract. His managing director accused the elected accountable transport authority of
	“operating in the same camp as Marx, Lenin and Trotsky.”
	Have the Government stood by transport authorities that are trying to secure a better deal in the use of taxpayers’ money? No. On the contrary, the Government are using their reform of bus funding to stack the odds even further against transport authorities. They are caving in to pressure from the bus companies and proposing to exclude from better bus area funding, authorities that seek greater control over fares through quality contracts. Yet again, the Government are on the side of the wrong people and are putting the interests of the bus companies before bus passengers. The Government should think again and work with councils, not against them. Ministers should say to the bus companies, “You operate successfully in a regulated system right across Europe and you can do so here.” Instead, Ministers are cutting funding, oblivious to the impact on rising fares
	and reduced services, and standing in the way of local authorities that are seeking reform to deliver more for less and keep down fares.
	On rail and bus services, the cost of transport is rising by well above the rate of inflation. The Government should listen to passengers, and the House should support the motion. Let this be the last year when the train companies are allowed to turn the so-called cap on fare rises into an average. The Government should restore the strict cap on fares that was introduced by Labour and that they scrapped. They should also listen to passengers about ticket offices and look at the ideas that we have set out to make fares and ticketing fairer and simpler. The Government have so far shown themselves to be completely out of touch on the rising cost of transport and the pressure that it is causing for families who are already feeling the squeeze on household budgets. Today is an opportunity for Ministers to start listening, recognise the consequences of the misguided decisions that their predecessors have taken over the past two years on rail and bus services, and act. I invite the Secretary of State for Transport to do so.

Nigel Evans: Before I call the Secretary of State, I should say that there will be a time limit on contributions. It is difficult to say what the limit will be until the Secretary of State sits down, but I should not think that it will be much more than six minutes.

Patrick McLoughlin: I start on a bipartisan note by joining the hon. Member for Garston and Halewood (Maria Eagle) in wishing her colleague the hon. Member for Barrow and Furness (John Woodcock), whom I see in his place, a speedy recovery and return to the Front Bench. We all wish him well and understand why he has taken the decision that he has in the short term.
	I could not help but think that the hon. Member for Garston and Halewood and myself must have lived in different countries. From listening to her speech, it was almost as if there had been utopia until the general election, with everything fine and wonderful and the train companies bowing to the wishes of the Government and always doing what was right by consumers and the Government. Then I read a few Select Committee reports from the last Parliament to put me on the right track. I could not help but be struck by a report of the Transport Committee from 2006, when it had a Labour majority and a Labour Chairman. It stated:
	“Both the Department for Transport and the train operating companies quoted growth and the fact that ‘the UK has the fastest-growing rail patronage in Europe’ as reasons not to be overly concerned about price levels. Indeed, the Government demonstrated breathtaking complacency”
	about fares and ticketing. The hon. Lady should not imagine that the problem of fare rises is new. She said that there was no recession then, but we were about to go into one of the biggest recessions that this country has ever suffered. I will come to that a little later, but I am conscious of time—although you did not tell me to be brief, Mr Deputy Speaker, I am aware of the fact that you said there will be a time limit on speeches. I will try to be a lot briefer than the shadow Secretary of State was in her 30-minute opening speech.
	I am afraid that a lot of what the hon. Lady said was a mixture of the ill informed and the inaccurate. The motion does nothing to help passengers or investment, and it says all that we need to know about the Labour party. Let us be plain about some of the facts, which might help the Opposition. The motion calls on the Government to cap regulated fares at 1% above inflation. We have. It was the last Government who planned for 70% of costs to be met by fare payers in 2013 and 2014, which would mean fares rising this year not by 1% above inflation but by double that. The fare rises are lower than they would have been under Labour’s plans. That would have been an additional tax on hard-working commuters that we have not been prepared to impose.
	I do agree with the shadow Secretary of State on some things. She has said that
	“we should reduce the public subsidy to the rail industry”.—[Official Report, 19 May 2011; Vol. 528, c. 522.]
	I agree. She has also said that if she were running the Department’s budget now,
	“we would have to make difficult and painful decisions in respect of cutting the deficit”.
	Indeed, and Labour did make some of those difficult decisions. She talked about ticket office opening hours, and it is a fact that in the last five years of the Labour Government, Ministers approved cuts in opening hours at approximately 300 stations. Now the Opposition seem to think that that is wholly wrong, but they were only too aware of the need for it when they were in government.
	I agree with the hon. Lady, too, that it is right that we have a record level of investment in our railways at the moment, and that railway passengers have to contribute to that as well as the taxpayer. We have more trains and better services and we are delivering new lines. We are also delivering for passengers by capping the average increase in regulated fares at RPI plus 1% not just this year but last year and next.

Cheryl Gillan: I note that my right hon. Friend and his fellow Ministers have a long-term aim of reducing the cost of railways to both passengers and taxpayers, and therefore ending the era of the above-inflation rail fare increase. Will he therefore reassure me that he will not look to the taxpayer and the fare-paying passenger to bear the £33 billion cost of his plans for the High Speed 2 railway?

Patrick McLoughlin: I am grateful to reaffirm to my right hon. Friend the Government’s commitment to adopt what was Lord Adonis’s plan for HS2, and I pay tribute to the former Secretary of State. My right hon. Friend and I disagree on HS2. I believe that it is vital for future investment and opportunities for the whole country. I will say more about that in the House in a few weeks’ time.

David Davies: Will my right hon. Friend also mention the rise in transport costs for users of the Severn bridge and say whether there is any possibility of capping those increases when the bridge returns to public ownership in 2017-18?

Patrick McLoughlin: If I am still Secretary of State in 2017, I will have been the longest serving Transport Secretary. If my hon. Friend will forgive me, I have enough
	problems on my plate without making commitments for 2017. I look forward, however, to a Conservative Government making that decision—that is as far as I will go towards meeting that commitment at the moment.
	The fact that we have capped fares to RPI plus 1% will benefit more than a quarter of a million annual season ticket holders by around £45 a year, and some commuters will be more than £200 better off over the two years. The motion before the House is confused in another way. It attacks the flexibility that allows operators to increase some regulated fares by more than RPI plus 1% if they cut other fares by an equal amount—for example, on Virgin Trains the Rugby to Euston season ticket has increased by almost 1% less than inflation. Today, the hon. Member for Garston and Halewood tried to claim that it was not the last Government who introduced that flexibility, or that such flexibility existed for more than one year. The changes to the agreement, which I can read to her, make it clear. The deed of amendment states:
	“With effect from 00.00 on 1 January 2010 Schedule 5.5 of the Franchise Agreement will be amended as set out in the Appendix to the Deed…From 00.00 on 1 January 2011”.
	Therefore, the agreement was amended for just one year.

Maria Eagle: Is the Secretary of State saying that Lord Adonis, whom he just praised, misled the Transport Committee when he said that he intended the agreement to go into the future and that it was a permanent change? Does he realise—he will find it out in 2014—that the year before an election, the limits of how far into the future one can go in the time of one’s successors are set by Whitehall and are different from those for the beginning of a Parliament?

Patrick McLoughlin: I am not accusing the noble Lord of misleading anybody; I am informing the House of what he did as Secretary of State. He may have wished his changes to last longer, but they did not and were solely for that one year. Indeed, when the 5% flexibility was introduced in 2004 it led to some increases of 11% under the previous Labour Government in 2009 alone. That flexibility was suspended for one year—an election year.
	However, that is not Labour policy now. How do we know? Well, let us look at Wales where this year under the Labour devolved Administration fares went up by RPI plus 1%, with flexibility of 5%.

Henry Smith: My right hon. Friend is right. Labour says it has changed its policy on fare flexibility, but in Wales, where it is in charge of the devolved Administration, it has agreed flexibility of up to 5% on train fares.

Patrick McLoughlin: Indeed; I am grateful to my hon. Friend. I hope no Welsh Labour MPs support the motion tabled by the shadow Secretary of State. If they do, not only will they back up my argument that we are having a synthetic debate introduced by an Opposition who have synthetic policies on transport costs, but they will not mean what they say. When Labour is in a position to change the rules, it does not do so. In Wales, it has accepted the flexibility it believes it needs to provide a proper service; the Labour Government in Wales have acted in exactly the same way as the UK Government.

Richard Burden: Will the Secretary of State give way?

Patrick McLoughlin: I will, but unfortunately Birmingham is a few miles away from Wales.

Richard Burden: Indeed it is. The Secretary of State says that the debate is synthetic, but the anger of my constituents and many others at the performance of London Midland in the past year is not synthetic. He has recently dumped the deal with London Midland. The good news is that that provides some pre-concessions to passengers, but it is also said that he has not actioned a break clause in the contract. That could have happened at the end of this year, but it has been extended to 2015. It is also unclear what milestones and review mechanisms will be in place to hold London Midland to its word. Will he clarify whether his measures give London Midland more of a free rein or whether he will introduce a measure that forces it to do what it says it will do?

Patrick McLoughlin: The Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), has made a statement on that, in which he also outlined some of the requirements we expect of London Midland. He and I will be watching the performance of that franchise very carefully. It is important that we give passengers the service they rightly expect and demand. We have put in place a number of measures that will cost London Midland considerable money to put into operation, and I expect it to do so.
	I am conscious of the time—time moves on when I am continually trying to help colleagues to understand where their policies have gone wrong in the past. We are looking at ways to improve our railway services. As I have said, the Labour party, which is in control in Wales, has kept exactly the same flexibility on rail fares that the UK Government have retained.
	In 10 years, the Labour Government electrified only 10 miles of railways; this Government will electrify 850 miles, including the midland main line, for which my hon. Friend the Member for Loughborough (Nicky Morgan), the Whip, who is sitting on the Front Bench, has campaigned so hard.

Julie Hilling: Will the Secretary of State give way?

Patrick McLoughlin: I will give way only briefly, because I am conscious of the time.

Julie Hilling: Does the right hon. Gentleman remember the amount of money the Labour Government had to put into the railway to rebuild it after 18 years of no investment under the previous Tory Administration?

Patrick McLoughlin: The hon. Lady is a sadly missed member of the Transport Committee, and was there when I first appeared before it. She should be careful, however, because she was probably a member of the Committee during its inquiry on Rail 2020, which quite clearly shows that the worst year for subsidising the railways was 2000-01. I cannot remember what party was in government at that time, but it is true that investment went up afterwards—[ Interruption. ] She is looking for the page number. Page 9 simply and straightforwardly sets out the record.

Julie Hilling: Will the Secretary of State give way?

Patrick McLoughlin: I must press on. I am sorry I cannot give way to the hon. Lady. The facts I have pointed out are in the report. I will try to make progress and give other hon. Members the chance to contribute to the debate.
	We are putting record investment into the railways. In the 19th century, our railway was a symbol of Britain’s innovation—including London’s underground, the first anywhere and 150 years old today. Now, the railway is experiencing an extraordinary renaissance. Last year, the number of passenger miles travelled was almost 50% higher than it was in 2000. More people are travelling by rail today than at any time since the 1920s, and rail freight has grown by more than 60% since privatisation. We have soaring demand, but limited space. Regular passengers on busy lines know only too well what that can mean—overcrowded carriages and uncomfortable journeys. That is not good enough and we are going to sort it out.
	In July, we announced £16 billion of funding for the network between 2014 and 2019. Inter-city travellers will benefit from the completion of the northern hub in Manchester, a £240 million investment on the east coast main line and a further £300 million for high-value, small-scale schemes in other parts of the country. We approved a £4.5 billion contract to build a new generation of inter-city trains in County Durham, creating some 900 jobs, and we are procuring thousands of new carriages for Crossrail and Thameslink. We are also getting cracking with HS2, the biggest new transport scheme since the building of the motorways. Meeting demand, however, is only part of the problem.
	While the previous Government blew the budget, the railway was allowed to grow wasteful—up to 40% more expensive to run than those of our European competitors. We have therefore had to take a hard look at the industry and have a rail reform programme to tackle the £3.5 billion annual efficiency gap identified by the McNulty report in his rail value-for-money study. Already, major savings are being found. Ultimately, this focus on efficiency will help us to deliver our goal and put an end to above-inflation fare increases at the earliest opportunity. A railway that is efficient and modern is a railway that is affordable to use.

Nia Griffith: May I ask the Secretary of State whether, in his drive for efficiency and savings, he can give assurances to the steel industry that it will not be penalised by rail freight charges?

Patrick McLoughlin: I will look at the hon. Lady’s point, but I hope she will make representations to the Welsh Assembly following the motion that the hon. Member for Garston and Halewood has tabled. Perhaps the hon. Member for Llanelli (Nia Griffith) will consider not voting for the motion in light of it being in direct competition to what the Welsh Assembly, which I understand is Labour controlled, is doing.

Bridget Phillipson: I am conscious that the Secretary of State has not yet referred to bus services. My constituents rely entirely on bus services, as they do not have the luxury of a rail link. Does he agree that it is entirely wrong for
	operators such as Stagecoach to scaremonger about the introduction of quality contracts in Tyne and Wear and to threaten to sack staff and pull out of the region? Should the Government not back up integrated transport authorities, such as mine, which are making decisions that are in the best interests of local people?

Patrick McLoughlin: I am coming on to say something about bus companies, but I will not comment on individual contracts that are being negotiated, as it would be wholly wrong of me to do so.
	I want passengers to get the best deal from a ticket system that is easy to understand, and that is why we have set up the fare and ticketing review. This is not about higher fares; it is about simpler fares. It is not about catching out passengers who have to travel when trains are busiest, but getting good deals for people when there are seats to spare. Taxpayers, whether they use trains or not, all contribute to the cost of running the railway. I know that when people face big bills and tough times they really feel the pressure of higher fares. That is why we are looking at ideas such as smart ticketing and more flexible season tickets, so that they only have to pay when they actually need to travel. The way we work is changing and it is right that tickets change too.
	This Government are on the side of passengers, whether they use trains or buses. That is why we have protected free bus travel for pensioners and are putting in place a level playing field so that operators can compete to bring fares down. The basic truth, however, is that the cost of bus travel has risen, including during the decade to 2010 under the Labour Government, and that is mainly due to higher operator costs, such as fuel.

Sheila Gilmore: Will the Secretary of State give way?

Patrick McLoughlin: I am sorry, but I must make some progress.
	From the first day of the coalition Government, our priority has been to tackle the deficit that we inherited, to rebalance our economy, to get people back to work and to boost growth. Transport plays a key part in that process. This Government have capped fare rises. We are getting the investment in, tackling overcrowding, increasing seats and services, and delivering High Speed 2. It is the right deal for passengers and the right deal for Britain’s future.

Mr Speaker: There is a six-minute limit on Back-Bench speeches, and it applies with immediate effect.

Ian Mearns: I welcome the opportunity to speak in today’s debate, which is extremely timely, given the news in today’s newspapers that once again the north-east is to lose out on vital rail infrastructure investment. I want to draw some important links between fares paid, the turnover of rail operating companies, the profits they make and levels of investment.
	This morning, The Journal in Newcastle announced that Network Rail’s £37 billion five-year improvement programme looked set to snub a wish list of north-east track upgrades. The Secretary of State just trumpeted
	that 850 miles of line were to be electrified—well, not in the north-east of England, I am afraid. He also mentioned that £240 million was to be invested in the east coast main line. On the basis of current profits and the amount of money going back to the Department for Transport from the east coast main line, that is about one and a quarter years’ operating profit—so not much to be thankful for there. Rail passenger groups have warned that, although some east coast main line work will speed up connections, almost none of Network Rail’s refurbishment money will go to north-east England. Incidentally, the east coast main line is operated by Directly Operated Railways, which is owned, in turn, by the Secretary of State and the Department, so he has significant influence over the company—or certainly should have.
	Lines in the region calling out for electrification, new passenger services or full-scale reopening have had their case turned down, as money has gone instead to improving services via Manchester and Leeds, as well as improving links to London. Of the £37.5 billion budget, only a pittance is earmarked for track enhancements in the north-east—mainly for the easing of the so-called pinch points between Northallerton and Ferryhill. From a north-east perspective, projects would help to boost mobility and connectivity in our region and enhance our prospects for economic growth.
	This snubbing, yet again, of the north-east is particularly galling given the range of fare deals being offered to north-east customers, compared with our Scottish counterparts, by the east coast main line. We sometimes have to pay £100 more for a journey that is an hour and a half and a 100 miles less. I have no quarrel with my Scottish colleagues and their constituents getting good deals from east coast main line, but on behalf of my constituents, I have a duty to demand the same kind of deals and discounts for the travelling public in the north-east as those from which colleagues north of the border benefit.
	The east coast main line is working at a significant profit and contributing those profits to the national pot.

Ian Lavery: I had a look at the fares on the internet just before we came into the Chamber. A return fare from Newcastle to King’s Cross was £301. With the minimum wage at £6.19, that means that people have to pay 48.62 hours of work at the minimum wage for one journey from Newcastle to London return. Is that fair?

Ian Mearns: There is an awful lot about current fare structures that is desperately unfair, particularly for people on low wages and those trying to get jobs, and particularly in a region such as the north-east, where many have to travel to get work.
	As the independent report stated in September, a railway company that was temporarily renationalised by the Government three years ago reported increased profits and an improvement in passenger satisfaction. DOR, which took over the running of the east coast line from National Express, said that its operating profit increased by 7% in the year to March to £7.1 million. Turnover for the year amounted to £665.8 million—an increase of £20 million—leaving a profit before tax and service payments to the Department of £195.7 million.
	That was an increase of £13 million. Putting that against the £240 million proposed investment in the east coast main line makes the amount look extremely modest indeed.
	I have a great deal of respect for east coast main line as a franchise. I sympathise with its staff, who often work in difficult circumstances, dealing with the failures of creaking infrastructure and worn out rolling stock and equipment, yet an awful lot of what the travelling public have to put up with on the east coast main line could be avoided through some relatively modest investment, which would be entirely affordable given its profits.

Mark Lazarowicz: My hon. Friend mentions the east coast main line staff, who do indeed provide a good service to passengers. I am sure that he, like me, frequently comes across people who are confused about whether they have the right ticket for a journey—a train might be late or they might get on the wrong train. The poor staff then have to deal with the problems that that creates. Is that not an example of the kind of complication that drives away passengers and often makes them go for higher fares rather than cheaper ones?

Ian Mearns: Indeed, and one criticism I would make of the last Government is that they did not sort out the complicated franchising system, which has left us with a complicated rail ownership programme across the country.
	The Chancellor of the Exchequer proudly announced investment in infrastructure as a means to unlock growth. However, analysis by the Institute for Public Policy Research shows a biased picture. The think-tank examined the data, detailing the projects to be brought forward as part of the national infrastructure pipeline. Of the projects that were identified as benefiting a particular region and where public funding was involved, it found that London and the south-east accounted for 84% of planned spending, compared with 6% in the north. That equates to some £2,700 a head for each Londoner, which is more than the total for all the other regions combined, which includes £201 a head for Yorkshire and Humberside, £134 a head for the north-west and just a fiver for the north-east of England. My constituents do not believe those figures, but they are absolutely right. Why, if we get a meagre £5 of investment per head, should we pay extortionate rises in rail fares, which have risen nearly three times faster than wages since the recession? In fact, between 2008 and 2012, average rail fares increased by 26.6%, with wages rising by just 9.6% over the same period. Recent research by the think-tank Transport for Quality of Life has shown that UK rail fares are the most expensive in Europe and that rail privatisation is costing taxpayers £1.2 billion a year, with train operating companies making large profits on the back of public subsidies.
	Speaking of profits, I was appalled to learn recently of a dispute over pay involving east coast main line and a subsidiary company called ISS—International Service System—which centred on its cleaning staff. Cleaners were being paid £6.08 an hour—a figure that is below the national minimum wage and is, I believe, illegal. On top of that, they got no pension scheme, no enhancements for unsocial hours, bank holidays or weekends, no sick
	pay above the statutory minimum and no travel allowances. The east coast franchise, which likes to promote itself as a first-class service, was treating employees of its contract cleaning company in a third-class way. ISS is a huge multinational company, with more than 500,000 employees worldwide, 43,000 of whom work in the United Kingdom. It is disgusting that it was able to do that to its hard-working employees. Indeed, following on from yesterday’s debate, this has a knock-on effect, as the Government have to fork out in-work benefits to many of these people to subsidise the industry.
	Pressure must be put on Network Rail by the Government to ensure that north-east services get a fair allocation of resources. Connectivity, particularly by rail, is essential to the economic prospects of regions such as the north-east. Despite their stated commitment to reduce the deficit, the Government still find themselves, month after month, deepening the crisis yet further. When will they recognise the essential link between investment in growth, particularly in regions such as the north-east, and their prime aim of deficit reduction? The two are absolutely connected.

Andrew Jones: The motion before us is very disappointing. It fails to recognise why there are costs in our transport system or what the Government are already doing about them.
	I want to focus on the rail network, because it is the transport area undergoing the most significant change, as we are in the biggest period of rail investment since the Victorian era. We all know that there are inefficiencies in our rail system. The McNulty review, which was commissioned by the previous Government, reported inefficiencies of between £2.5 billion and £3.5 billion in the system, and found that our railways were up to 40% less efficient than the best of our European counterparts. Those are inconvenient facts that the motion ignores. It also ignores the success of the industry. As my right hon. Friend the Secretary of State mentioned, there are as many passengers on our rail network now as there were in the 1920s, yet the network is significantly smaller than it was then. That is one of the causes of overcrowding. It also shows, however, that passengers are choosing to use rail.
	I am going to talk about an area in which the Government have introduced a radical change of policy that will cut costs for passengers and improve the service they receive. That policy is rail electrification. Let me remind the House of how the UK performs in this area. We have electrified 34% of our network. In 2010, the UK was 20th out of 29 European countries in the league table of electrification. We are ahead of the former Yugoslav Republic of Macedonia, Latvia, Estonia, Greece and Lithuania. Wales and Albania were the only two countries without a single mile of electrified railway.
	Why does this matter? It matters because electrifies railways are cheaper to run. Electric trains are cheaper to buy. They weigh less, and so put less wear and tear on the network, which in turn costs less to maintain. They require less engine space, and so can accommodate more passengers, which contributes to the capacity issue. They can accelerate and decelerate more quickly than diesel trains. This means that passengers can enjoy faster journey times or that there can be more stops for
	the same journey time, or that there can be a combination of the two. They are also, of course, more environmentally friendly. Rail electrification is part of the long-term solution in taking cost out of running our railways.
	I mentioned earlier that this area has seen a radical change of policy direction. Labour managed just 10 miles of rail electrification in 13 years. That is not even a snail’s pace. In contrast, this Government have announced 850 miles, and we are only halfway through this Parliament. That represents a huge change of scale and ambition, tackling cost and capacity for the longer term.

Cheryl Gillan: Does my hon. Friend agree that this Government have also led the way by announcing the electrification of the railway line from London all the way down to Swansea and, more importantly, the electrification of the valleys lines in south Wales, which will mean a great deal to a large number of people? I am pleased to say that those measures are supported by Members on both sides of the House, and I look forward to the projects being completed in due course.

Andrew Jones: I completely agree with my right hon. Friend. This is not just an abstract policy; we are seeing real change on the ground, and there is good news right across the country. As she says, the Great Western main line is being electrified between London and Swansea, along with the valleys lines and the vale of Glamorgan line, which will bring electrification to Wales for the first time. The midland main line is being electrified between London and Sheffield, and that will obviously include Loughborough. A matter of great importance to my constituents in Harrogate and Knaresborough will be the electrification of the TransPennine Express services between Leeds and Manchester. That is just part of the massive rail investment that we are seeing in the north. There are many other projects, and I would like to highlight the complete funding of the northern hub, which will vastly increase capacity between our great northern cities.
	Those projects involve major long-term funding decisions. Sometimes, we have been reluctant to take such decisions, but not under this Government. The ministerial team deserves praise for that. However, I cannot resist taking this opportunity to highlight a marvellous electrification opportunity. This is a bit of a local advert, and I thank the Ministers for listening. I am talking about the Leeds-Harrogate-York line. The line has up to 3 million passengers a year, its usage is growing rapidly and it serves an area of high economic activity. The area also has a significant visitor economy. The Harrogate international conference centre attracts more than 300,000 visitors a year, and 500,000 visitors attend the Great Yorkshire show each year. The area is so inadequately served by its rail facilities, however, that less than 20% of its visitors arrive by rail.
	Electrification of the line is part of the solution. There is enormous support for the electrification of our line—from all the councils along the route, from the West Yorkshire passenger transport executive and, of course, from all the local chambers of trade and commerce. May I therefore ask the Minister, perhaps a little cheekily, to look at what can be done for the Leeds-Harrogate-York line and to meet me and colleagues to discuss it?
	The questions we should be asking today about transport costs are not those in the motion before us. We should be looking at the underlying reasons why we have cost
	in the system. I think the Opposition know that, which is why they commissioned the McNulty report in the first place. Overall, I completely agree with the desire to cut the cost of travel in the UK, but I will not support the motion because it fails to take so many important issues into account.
	I have been talking about rail solutions, but the Government have been taking action in other areas, as well. We should look at the different approach to fuel duty. The last Government increased fuel duty 12 times, and left office with six further rises planned. This Government have stopped them, and as a result motorists are seeing fuel duty 13p a litre lower.
	I welcome the Opposition’s interest in delivering value for taxpayers and passengers, but it is a late conversion. As identified in the McNulty report, they left our rail network inefficient. Under the last Government, rail subsidy went up by 337% at a time when passengers saw real-terms fare rises. Bus subsidies went up by 127%, despite real-terms fare increases again. It is only by tackling the underlying drivers of cost that better value will be delivered for taxpayers. This motion does not even consider that, which is why I will not support it.

Louise Ellman: Transport is a vital issue. It is essential for people to get to work and to get to social amenities. That is why it is so important that we debate not just the provision of transport itself, but the cost—because transport has to be affordable if it is to be put to best use. I shall confine my comments to the rail service, and I shall refer to some of the findings of the Transport Committee’s report on rail, which was recently published. There will be an opportunity tomorrow to debate the Select Committee’s report on bus services, and I hope there will be the same number of Members in Westminster Hall tomorrow afternoon as there are in this Chamber today.
	It is important to note that rail is, in fact, increasingly popular. The number of people travelling by rail has doubled in recent years, while the amount of freight carriage has increased by about 40%. There is rising concern, however, about fare levels. I assume that that explains why the Government’s proposal to increase regulated fares by an average of RPI plus 3% was reduced to RPI plus 1%—because of the public outcry and concern about increased fares. It is also true that the Government are implementing a policy—indeed, they inherited it—whereby passengers were expected to pay an increasingly higher percentage of the cost of rail than the taxpayer. Important issues remain about how this policy is applied, about the cost of running the railways, about how efficiencies can be achieved and about how costs and the allocation of subsidies can be assessed.

Kwasi Kwarteng: The hon. Lady made an important point in saying that both the Conservatives and Liberal Democrats in government and Labour decided to shift to some degree the cost of rail transport from the taxpayer to the passenger. The hon. Member for Garston and Halewood (Maria Eagle) did not comment on the issue from the Front Bench, so I was wondering what level of subsidy and what proportion of the cost should be borne by the passenger?

Louise Ellman: At the moment, the overall distribution is about 60% for the passenger and 40% for the taxpayer. In the breakdown of how the funds are allocated on different types of services, however, there are very stark differences. It is in respect of the allocation of the cost and the resultant proportions of contributions made by taxpayers and passengers where further major questions need to be asked. That is why the Select Committee report highlighted the need for more transparency about the cost of different types of services and where the subsidy goes.
	The Committee’s main conclusion was that the Government should rule out demand management that would lead to even higher fares at peak times. It made the important point that many people have to travel at peak times in order to get to work.

Andrew Turner: We must all acknowledge that at peak times the demand placed on the rail network can far outstrip supply. How does the hon. Lady think demand can be prevented from exceeding supply? Does she not agree that more should be done to encourage investment in local areas, outside the major cities, in order to remove the need for most of us to commute?

Louise Ellman: People often travel at peak times because those are the times when they have to get to work. They have no choice. However, there are other ways of addressing the question of demand, and I shall say something about them later.
	The report also talks of the importance of achieving efficiencies, although we think that the aim of making efficiency savings of £3.5 billion by 2018, as McNulty recommends, is a challenging one. The bringing together of different parts of the rail industry in the Rail Development Group, and through other means, is welcome, but it is important for the industry then to work in the interests of passengers and the taxpayer, not just in its own interests. It is also important for it not to cut corners and put safety at risk in order to achieve efficiencies. We have high safety standards which should not be jeopardised, and strong regulation is particularly important for that reason. The regulator needs to be able to act firmly and decisively.
	Members have mentioned other means of achieving efficiencies and reducing fares, or at least reducing the rate of increase in fares. We need to think about smart ticketing and innovation, and about introducing more flexibility in the way in which fares policy is drawn up and implemented, which has been sadly lacking. There should also be more transparency in the use of public funds. It is extremely important for the rail service to receive a public subsidy, because it is a public service, but it is equally important for the £4 billion public subsidy going into the system this year to be dealt with in a way that people understand, so that they can assess whether it is being used effectively. Not all the information that we have at present enables them to do that.

Jim Shannon: Will the hon. Lady give way?

Louise Ellman: I am sorry, but my time is very limited.
	Some information has been published about the subsidy for the London North Western route, which, we are told, amounted to £1.2 billion in 2010-11. That is a
	significant proportion of the £4 billion that is going into the overall system. The area covers wide expanses, including the west coast main line run by Virgin and Cumbrian rail services run by Northern Rail. We have been given an overall figure—a very major figure—but we do not know how the subsidy is allocated between different services, or indeed between different parts of the country. That is just one example of the need for more transparency so that we can assess whether subsidies are effective.
	I welcome Network Rail’s recent announcement that more than £35 billion will be invested in the next control period, 2014-19. However, the Committee will look at the figures in detail and consider what they actually mean, and the rail regulator will look at them as well before anything is finally approved. It should be noted that although the announcement of more much-needed investment in the rail system has been welcomed, passengers have expressed the fear that they will have to pay for it through even higher fares, which renders the need to look again at a policy on regulated fares even more urgent. The Committee has asked Ministers to do that.
	In due course there will be an opportunity to discuss the Committee’s complete findings, and we will do more work on rail franchising and rolling stock acquisitions, another important area in respect of savings. I hope my comments this afternoon have helped to inform the debate. Rail is increasingly popular and a good service is currently offered, but there is increasing concern about fare levels, and we must address that.

Alan Reid: After many years of above-inflation rail fare increases, rail fares are now simply too high, so I am pleased that as a result of pressure from the Liberal Democrats and others, the coalition Government’s previous plan of introducing an increase of the retail prices index plus 3%—which would have made a bad situation even worse—has been dropped and that that increase has been reduced to RPI plus 1%, which means fares will be lower than they would have been under the previous Labour Government.

Angus MacNeil: Will the hon. Gentleman give way?

Alan Reid: I certainly will. I wonder whether the hon. Gentleman will draw the House’s attention to the fact that his Scottish National party Government have raised fares to his constituency and to Tiree and Coll in my constituency by 10%.

Angus MacNeil: RPI plus 1% was an SNP Government policy, so this is a case of stolen clothes. Unfortunately, ferry fares have risen for haulage, but there was no effort at all to reduce ferry fares under the Edinburgh Liberal-Labour Administration. Will the hon. Gentleman apologise for that?

Alan Reid: I am certainly not going to apologise after the SNP has just increased ferry fares by 10%. The hon. Gentleman is right, however, that the SNP Government in Scotland copied the Government here, so the rail fare increase in Scotland is also RPI plus 1%.
	Liberal Democrats believe it is important to end the era of above-inflation rail price increases as soon as possible. However, that important aim has to be balanced with the need to raise cash for the investment that our railways so badly need. Our railways have suffered from decades of chronic under-investment, leading to a system which was increasingly inefficient, overcrowded and highly expensive to run. I am therefore pleased that the coalition Government have committed to invest about £16 billion in our railways up to 2019. That will support over £9 billion-worth of improvements, which will help to provide more services and greater capacity, particularly for commuters to our nation’s biggest cities.
	The coalition Government are currently overseeing the biggest investment in our railway infrastructure since the Victorian era, and at the same time we are working hard to reform our railways and reduce unnecessary costs. The coalition plans for further rail electrification will also ultimately result in over 800 miles of track being electrified. Many speakers have contrasted that with the record of the previous Government. Our future plans include the important High Speed 2 project. It will create a direct high-speed link between London and Birmingham, which will eventually extend to Manchester and Leeds, and, I hope, Edinburgh and Glasgow as well. That will help enhance rail connections throughout the country and reduce journey times, and boost future opportunities for jobs and growth.
	I will not support the Opposition motion, as it has fallen into the typical Opposition party trap of calling for fare cuts while saying nothing about where the money will come from for the investment our railway system so badly needs. Liberal Democrats and Conservatives are working together in government to put our railways on a sustainable footing, and we hope it will soon be possible to keep fare increases below inflation.
	Although the country needs to reduce the deficit, I am pleased that the Minister, my hon. Friend the Member for Lewes (Norman Baker), has recently been able to announce more than £120 million of funding for buses, including £31 million for low-carbon buses. I also welcome his launch last year of the Government’s policy document, “Green Light for Better Buses”. It sets out a series of reforms that will attract more people on to the buses, ensure better value for the taxpayer and give local authorities more influence over their bus networks. Ultimately, it is for local authorities working in partnership with their communities to identify the right transport solutions for their areas.

Graham Stringer: Is the hon. Gentleman not aware that outside London there has been a continuing decline in the level of bus patronage and that the real answer to that is, as the shadow Secretary of State said, to have quality contracts or to re-regulate the buses? What are his Government going to do about that?

Alan Reid: The important thing is that the Government work together with local authorities and that power is devolved to them to find the correct solution; this Government are providing money and are working with local authorities.
	Cycling has another important transport role to play, and I was pleased with the announcement in the autumn statement of a further £42 million investment in the
	sustainable transport fund for cycling infrastructure, including cycling safety. No matter how much effort is put into providing public transport and encouraging people to use it, in rural areas, particularly sparsely populated ones such as mine, the car will always be part of the transport solution. So I am pleased that the Government abandoned Labour’s fuel duty escalator and have reduced fuel duty by 1p a litre on the mainland and by 6p a litre on the islands. I hope that the Government will soon get the EU approval required to extend this scheme to remote parts of the mainland.

Angus MacNeil: Hear, hear.

Alan Reid: I am glad that policy is welcomed by the hon. Gentleman. This is the one Government policy he is very supportive of, but it has certainly done a tremendous amount for his constituency. I am sure that he is suitably grateful.

Angus MacNeil: Does the hon. Gentleman not feel that the 5p reduction is perhaps a bit small and that, given the price of fuel, we should be striving to make that derogation from the European Union somewhat greater?

Alan Reid: I would certainly support any efforts to increase that discount. Such a move would need EU agreement, but I would certainly be happy to work with the hon. Gentleman to try to obtain it. It is important to point out that from April fuel duty in his constituency will be almost 20p a litre less than it would have been had the previous Government’s policies continued.
	I hope the Government will introduce road pricing on motorways and major trunk roads, using that income to reduce fuel duty. Such a system would rightly tax people more for using their car on journeys where there is a public transport alternative. This coalition Government are tackling the problems of lack of investment in our public transport system, in contrast to the Labour motion, which offers no solutions whatsoever. I certainly will not be supporting the Labour motion, and I am sure it will be overwhelmingly defeated.

Mark Lazarowicz: The starting point for this debate has to be the fact that Great Britain has some of the highest rail fares in Europe. I recognise, of course, that to pay for investment in the rail network the passenger—the fare box—will have to make an important contribution to the funds required. However, the passenger should not be asked to pay an unfair burden, and one way in which we can ensure that passengers are not forced to pay more than they need to is by ensuring that the revenue earned from the network is actually used for the benefit of the network—for the benefit of passengers—and is not siphoned off out of the system.
	The evidence from the decades of the privatisation regime, instituted by a previous Conservative Government, is overwhelmingly clear. That approach has meant that billions of pounds has passed out of the system, away from passengers and away from possible benefits of infrastructure investment. Instead, the benefits have been in the form of big profits for many of the companies involved, not just train operating companies but those with ancillary roles in the system, including some of the
	providers of rolling stock, to mention just one example. This has not just been about money flowing out through large profits; it has also been about operating inefficiencies being brought into the system. Again, those have been to the detriment of passengers and, in their own way, have led to fare increases.

Andrew Turner: Can the hon. Gentleman explain why such inefficient companies win these contracts?

Mark Lazarowicz: Let us leave aside the fact that there are not many operators in the field to bid. I am not saying that an individual operator is necessarily inefficient, but that the system as a whole leads to inefficiencies as well as to profits being paid out to private companies when they could be invested in the system.
	I said that not all companies are inefficient. One example that showed the difficulties and negative effects of privatisation at their highest was the disaster of Railtrack, which was linked not just to private ownership and that company’s motivation in its operations but to the fragmentation of the operators and Railtrack’s distance from the train operating companies. That example also shows how some of the damage caused by privatisation began to be turned around. It is not a perfect organisation, but the publicly owned Network Rail has managed to repair some of the damage caused by fragmentation of the system and we have seen a safer railway network and better value for the taxpayer, for passengers and for other users of the rail network in the costs of maintaining the system.

Jim Shannon: One of the greatest burdens for people in employment is that 30% of their wages can go on travel. People are travelling further, too, to get jobs and employment. Does the hon. Gentleman feel that consideration has been given to those people who regularly use public transport, be it bus or rail, to get to work?

Mark Lazarowicz: Absolutely. That is an example of how increased rail fares damage people daily and effectively worsen their standard of living.
	The most recent example of the damage caused by the privatised regime on the railways has been the fiasco of the west coast main line franchise. That fiasco is likely to land the Department for Transport—and therefore the taxpayer—with a bill for hundreds of millions of pounds, which could have been spent on improvements to routes, stations and rolling stock. In contrast, we have the experience of the east coast main line, to which my hon. Friend the Member for Gateshead (Ian Mearns)referred earlier. Bringing the franchise into the public sector has been good business for the taxpayer and the directly operated company has brought money back into the public sector. In the last year, it has brought a premium of almost £200 million into the Department, which has gone back into the public sector rather than being siphoned off into a privately owned company.
	The problem is that there is an inherent difficulty in the tendering system that operates on the railways under the privatisation scheme introduced by a previous Conservative Government. In order to bring about long-term investment and security, a Government will want to see long-term tenders, but the longer the tender
	the less reliable any prediction of future traffic and income can be. That leads to a risk of the tender becoming either a loss-maker, with the operator seeking to hand it back to the Government and to make them pick up the tab, or one in which excessive profits are reaped by the private operator. The system itself is at the heart of the problems with the railways and of the fact that money that could be used to benefit our passengers has unnecessarily flowed out of the rail system.
	I want to concentrate on the east coast main line, which is of particular relevance to my constituency and to communities further south along the line. I urge the Government to drop the ideology and to choose the option that works and that will keep prices down for the traveller. They should keep the east coast line, which is successfully operated by Directly Operated Railways, in the public sector. I would rather that that was done on a permanent basis, but if the Government, for ideological reasons, are not prepared to do that, they should at least give the operators a long-term contract rather than leaving a sword of Damocles hanging over the company, the staff who work for it and the passengers and communities that rely on it.
	The Government could also take the opportunity to allow Directly Operated Railways’ east coast line to be a genuine public sector comparator for the rest of the network. If the Government will insist on reprivatisation for the west coast main line, they should at least ensure that a public sector bid can be put on the table as a comparator against which we can judge which provides best value for money for the taxpayer and the best services for the passenger. That is the way forward. Let us start putting passengers first and make sure that they get the benefit of investment rather than the companies, which have taken too much out of the railways for too long since privatisation was introduced by a previous Conservative Government.

Iain Stewart: I am pleased to have the opportunity to contribute to the debate. This is an important issue; there is a serious debate to be had about how we finance investment in the rail industry in future and about the cost of transport today. Like hon. Friends who have spoken, I will have no problem in voting against the Opposition motion; with depressing predictability, it is rather opportunistic, denies their record and contains few concrete proposals for the future. I asked the House of Commons Library for figures on how much rail fares increased between 1997 and 2010. The answer was 56% for local and regional operators and 98% for long-distance trains. Rail fare increases did not begin in May 2010.
	My first main point is that although the debate on rail fare increases is important, the reporting is not always helpful or accurate; the headline turn-up-and-go “Anytime” rail fares are often cited and from that it is extrapolated that Britain has the most expensive rail system in Europe. However, those tickets account for less than 20% of ticket sales. When we look at the whole series of available fares, the position is not as straightforward.
	In preparing for this debate, I looked at the Virgin Trains website for a hypothetical journey from Manchester to London. Yes, if I wanted to travel in peak time, turn
	up and go, a single would cost £154—a large sum. However, a wide selection of other fares for the same journey, as low as £12.50, was available on a wide range of trains. The point is that we have to look at the whole mix of fares, not just the headline ones.
	We do not have the same debate in the airline industry. The difference between the cheapest and most expensive air flights on the same route, say to New York, is enormous—from a couple of hundred pounds to £1,500 if someone wanted to turn up and go.

Mark Lazarowicz: I am sure that it is possible to get a £12.50 fare from Manchester on Virgin Trains on some occasions. However, does the hon. Gentleman not accept that that £12.50 will be valid to London Euston, but if he wants to go to Brighton, Dover or the south-west of England with a different operator, he will not be able to get a through ticket at that rate? He will have to get two separate tickets, which might cost more than a single through ticket, because he will not be able to get a cheap through ticket.

Iain Stewart: I accept that there is an unnecessary complexity in the rail ticketing system. The Transport Committee has looked at that issue and will continue to do so. If the hon. Gentleman will forgive me, I will not go too far down that path, as time is limited, but he has made a valid point.
	The comparison with Europe is interesting. A very good website called “The Man in Seat Sixty-One” does an independent comparison of European rail fares. Yes, when you look at the “walk up and go any time” fares, the UK is substantially more expensive, but on other tickets, including buying the day before, Britain is either on a par with France, Germany or Italy or very often considerably cheaper.
	I mention that because when we talk about rail fares, we need to differentiate between passengers compelled to travel at a particular time of day and the vast majority who have some flexibility over when they travel. The Opposition are right to highlight in the motion the issue of super-peak tickets, but they miss an important point. I completely accept that some passengers will not be able to change their time of travel, but others can. A super-peak ticket should not be designed to increase prices but to give rail operators the flexibility to discount other peak-time travel and encourage passengers to travel slightly later or earlier if possible.

Bob Stewart: Will my hon. Friend give way?

Iain Stewart: Certainly.

Bob Stewart: I thank my hon. Friend and namesake. Is it too utopian to hope that one day in future, rail fares, whatever they are charged at, will go up only by the rate of inflation, and that when we need to renovate our railways Government will deal with that?

Iain Stewart: I am not sure whether it is utopian. The increased cost of investing in our railways has to be met by a mix of passenger contributions and taxpayer contributions. At the moment, the balance is about right. The cost of travel by any means is going up, and that takes into account the extra costs of energy. Similar
	debates are happening in Switzerland, Germany and other countries about how they cope with paying for the extra investment in the rail industry.
	I return to my point about whether we can incentivise passengers to travel outwith the super-peak period. That is a line of questioning that I followed during the Transport Committee’s investigation when those in the rail industry were asked about what percentage of the daily commuter market could move their journeys as opposed to having to travel at the times they do. They were very reluctant to give a figure on that, so it is an area of uncertainty, but my own view is that with improvements in technology and more flexible working patterns, that share of the market will grow. In the last job I had before I was elected here, I had some flexibility because I could plug into the company’s database system and do a fair chunk of my work from home before having to travel in for meetings. If more and more employers give that flexibility to staff, as is entirely possible, it is perfectly feasible that rail operators will have an incentive to discount tickets—the shoulder, as it were—instead of putting up the super-peak fare, which I accept would be very unwelcome.
	Time prohibits me from going into some of the other issues in depth. As the hon. Member for Liverpool, Riverside (Mrs Ellman) said, I hope that we have a further opportunity to explore the issues raised in the Select Committee report. There is a need to get the costs of running our railways down, as has been highlighted in McNulty and many other studies. I am encouraged by some of the innovations that are happening. I think particularly of the alliance between Network Rail and South West Trains. It is too early to give a full evaluation of that, but it is already showing signs of making it more efficient and cost-effective to maintain and improve the railway. There is the possibility of increasing revenue from retail space at stations. These factors will all feed into generating revenue for the railways and maintaining the pressure on keeping fare increases down.
	I look forward to the Government’s conclusions from its consultation on ticketing. There is a real opportunity to drive down the cost of rail tickets in this country. However, we must look at the whole picture and recognise that we are pretty competitive compared with a lot of European countries. There will be pressures in future—that is a problem with the success of the railways to date—but the picture is not all bleak, and I very much welcome the steps that the Government are taking to improve the situation further.

Julie Hilling: The Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), has claimed that rail passengers are getting a premium service and that rail fares are not nearly as expensive as is being presented. I wonder who he is trying to kid. My constituents who are crammed like sardines into nearly 30-year-old trains do not believe that they are getting a premium service, and even McNulty acknowledged that fares overall are high relative to other countries.
	Research by Passenger Focus has shown that fares in Britain are the highest in Europe, more than four times higher than the cheapest country for medium-distance journeys and nearly twice as high as the next most
	expensive. Granted, if someone can purchase their ticket far in advance and specify which train they want, and advance-purchase tickets are available for that service, they may be able to find a fare that is cheaper or comparable with those of our European colleagues, but for most people travelling for business that option is rarely available. Of course, if things happen and they are unable to get on a specific train at a specific time, they cannot transfer their ticket to another train, so the only way they can get the best price is to book in advance and accept zero flexibility and no refunds, which is something that the vast majority of us are unable to do.
	Witnesses to the Transport Committee suggested that the way to solve overcrowding on trains was to price most people off peak times. Indeed, the Government appear to be considering super-peak tickets that would be even more expensive than peak tickets. When the former Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond), gave evidence to the Committee, he answered a question of mine by saying that the railways are already a rich man’s toy. This Government seem to want to save some services for the super rich and price ordinary people off trains altogether. As Passenger Focus says, people should be incentivised to avoid travelling in the high peak, but not penalised even more when they cannot avoid it.
	Our highly complicated fares system does not help train passengers to find the cheapest means of travel. The proposal to close ticket offices just adds to the difficulty, particularly for those who are unable to book tickets via the internet. It now costs more than £300 for my constituents to travel to London during the peak. They could get a holiday in the sun for a week, with spending money to spare, for the cost of getting to our capital city. Rail prices for long-distance travel have become obscene and mean that we are putting cars back on to roads. That surely cannot be right.
	The vast majority of public transport journeys are made on buses. Since 2005, bus fares in metropolitan areas have increased by an average of twice the rate of inflation. Deregulation has produced a system where operators have been given a licence to print money at no risk to themselves. If an operator deems a service to be unprofitable, it can simply stop it and remove it from residents, unless the local authority steps in to save it. At a time when local authority budgets are being cut to the core there is no money to support those services, and we know that services are being cut, leaving people unable to get to work and the elderly and people of limited means stranded in their homes.
	Deregulation of the plethora of bus operators has also made it incredibly difficult to introduce any sort of travel card. London has had Oyster cards for nine years, but my constituents are still waiting. Although Transport for Greater Manchester is working hard to get our version of Oyster, it is finding it extremely difficult because of the various vested interests.
	I spoke yesterday about my constituent Leah, who is affected by the cuts to tax credits and other benefits. Leah works 16 hours a week to earn £101, but she has to pay £18 a week for her bus fares. If she lived in London, she would pay £11.20.
	The increases in train and bus fares are hitting ordinary people very hard. Wages have not kept pace with inflation and we know that people are already having to choose between heating and eating. Public transport costs are forcing many who can to travel to work in their cars and those who cannot to give up their jobs. The Government need to help local authorities to introduce quality contracts and Oyster-like travel cards and to keep bus fares down.
	It seems that running our buses or trains is a licence to print money. Even though the majority of rail franchises receive large subsidies, they still take operating profits out of the industry. It is very much a case of something for nothing, which is why it was so disappointing that, after the debacle of the west coast franchise, the Government, apparently on ideological grounds, would not even consider directly operating the railway, as is the case with the east coast franchise, and putting money back into the Treasury.
	Finally, I want to challenge the notion that the previous Labour Government did nothing on rail. We inherited a railway that had been starved of investment for 18 years and we needed to do some fundamental repairs, including rebuilding the west coast main line, which was already electrified. In 2006-7, the Labour Government spent twice as much as the current Government are spending, and in each year since 2003 more money was spent on the railways under the Labour Government than this Government are spending this year.
	Let us agree that public transport is also a public service. It needs subsidy and, more importantly, it needs to be affordable for all, so that it is not just a rich man’s toy.

Marcus Jones: The cost of rail and bus travel is extremely important to many of our constituents. The motion has great appeal, but having looked at the detail, it is quite empty and poses many questions but gives no solutions to the problems that it identifies.
	We must acknowledge the squeeze on the incomes of railway passengers over the past five years or so. Incomes have been stable at best for many people and salary increases have been well below price inflation. We need to recognise that fares have increased above inflation for the past 10 years. We must consider whether we can keep going back to those hard-pressed taxpayers year after year with those increases. In the debate about how we structure our fares, we must balance that need against the cost to all taxpayers of subsidising our railways, looking at how we can improve the efficiency of our railways, and ensuring that we see proper investment in the rail network and substantive service improvements. Having read the motion, I am far from certain that it strikes that balance.
	There is no acknowledgement of the £16 billion of investment that the Government are putting into our rail infrastructure. That includes projects such as the Nuneaton to Coventry rail upgrade and electrification, which will bring a huge benefit to my constituents, particularly to my many unemployed constituents who are seeking work and do not have their own transport. The motion does not take into account the huge rail electrification programme and the new train and rolling stock programme, which will reduce the running costs
	of our railways substantially in the long term, as my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) eloquently explained.
	The motion makes no mention of the improvements that there have been for passengers, particularly on the west coast main line, which is now seeing an additional four Pendolino trains and 31 trains being lengthened. When I get on the train at Nuneaton on a Monday morning, although I have to walk further along the platform to get to standard class, I know that when I get there, there will at least be a seat for me because of the new carriages that have been inserted into the trains.
	The motion also makes no mention of the £2.5 billion to £3.5 billion of efficiencies that were identified in the McNulty report. I hope that when the shadow Minister sums up, he will elaborate on whether his party supports making the savings identified by that report. After all, there is a cost to implementing the measures that his party is proposing.
	I note that the Labour party again brings “flex” to the fore in the motion. Perhaps the Labour spokesman will explain why, as with so many other policies, his party pursued the “flex” policy until a few months before the general election and then changed the policy for only one year. He also needs to say why, if it is such an awful policy, his Labour colleagues in Wales are still using it. The motion calls on the Government to ban operators from increasing fares above a strict limit. That is a laudable aim, but the motion is silent on what that strict limit should be.
	That brings me on to the cost of bus travel. We must again consider the cost of living and the squeeze on many people’s incomes. Many of the lowest-paid people in my constituency rely on buses to get to and from work. The Opposition have been rather opportunistic in the motion and seem to have added bus travel to it as an afterthought. The text about bus travel is even vaguer than the first part of the motion. Again, the motion does not acknowledge that fares increased by 35% between 1995 and 2010, which included 13 years of Labour Government. During that time, the average fare increases were well in excess of 2.5%—the same as over the past two years. However, over the past couple of years, the increases have been below the rate of inflation. I say to the Labour Front Benchers that, during the period of the Labour Government, the subsidy to bus operators increased by 127%, while fares also rose by a huge amount. That is not good value for money.
	As I have pointed out, Labour’s record on bus travel was not good. We know that if it were in government, fuel would be 13p a litre more expensive and bus companies would be adding that cost to passengers’ fares, compounding the increases that we have seen over the past couple of years. I suspect that if that had been the case, we would not have seen the £4 million investment that Stagecoach has made in new buses in my constituency, which I welcomed several weeks ago.
	We must take into account the pressures faced by all our constituents and limit fare increases, but we must also acknowledge the taxpayer contribution and ensure that our public transport is fit and efficient for the future.

Alison Seabeck: This is an incredibly important issue for the people of Plymouth and the far south-west. We are well over three hours
	away from London by train, we have no air link, so a vital connection to a city of 300,000 people is missing, and we have only two major road links. Yet the new fare for an anytime single to or from London with First Great Western is £131.50, and a single between Liskeard and Exeter, which is within the travel-to-work time that the Department for Work and Pensions thinks acceptable, is now £24. That is just for a one-way journey, which is prohibitive in an area of low wages. South West Trains has announced an average fare rise of 5.8% on its network.
	I accept that running what is a Victorian rail network is not cheap, and Network Rail has been carrying out work, much of which was started under the previous Government, and driving cost savings through the system. Work such as improving the signals at Reading will eventually lead to time and cost savings as well as improvements in reliability. Can the Minister say, though, whether there is any scope for Network Rail and the Office of Rail Regulation to work beyond the plans for the immediate control period and contemplate a degree of flexing in projects that are earmarked for control period 5 or 6? Since the publication of the initial industry plan, it seems to have been recognised that there can be instances in which forward planning to the end of control period 10 could be acceptable, and I would welcome his comments on that.
	Travelling by rail is expensive, and I believe that most passengers are generally willing to accept an increase in their fares in return for a reliable, comfortable journey. What they cannot accept is an increase when the flexibility in fares potentially allows money to go into the pockets of the private train companies and their shareholders. Even the National Audit Office has commented that the Government have not been able to demonstrate that allowing companies the flexibility to charge an additional 5% will not lead to the profits going straight to the train companies.
	We know that the increases are hitting low and middle-income families hardest, and we in the south-west simply cannot accept them, particularly as we lose out in identifiable rail expenditure, as the answer to my recent parliamentary question showed. We get just £40 a head, compared with £119 elsewhere.
	We have a serious problem with the reliability and resilience of the rail network. On two recent occasions I was on the last train through the system before the line was closed, the first time due to the flooding at Cowley junction outside Exeter and the second time when the sleeper train that I was on was caught in a landslide on the Friday before Christmas. It got through, but with various diversions. There are serious issues to address, and I am concerned by the fact that Cowley junction was not on the recent Network Rail list of projects. What we urgently need, and what Plymouth city council and its leader Tudor Evans have been pushing for, is a rail resilience taskforce. I would be interested to hear the Minister’s views on that proposal.
	The problems were threefold during the recent flooding. First, when the lines went down, communications were poor, with websites not being updated. To be fair to First, it now has a pretty good system in place, but I know from personal experience just how much conflicting information came out. Secondly, contingency plans were not in place. Buses were not immediately available, despite the forewarnings of bad weather. The bus operators
	could not communicate with the train companies, so there is more to be done. However, I want to put on record my gratitude and that of others to the people who worked in horrendously difficult conditions, including the emergency services.
	Thirdly, we could do better on infrastructure management. Some £25 million has been spent on Dawlish, yet the signalling cabinets at Cowley and Taunton are still not properly protected. I do not need to tell the Minister that there are often no drainage ditches in low-lying areas in the Somerset levels and no alternative routes that can be used if the main line to the far west goes down. With no air link, when the M5 is closed due to accidents we are effectively cut off.
	Fare hikes at a time of low wage growth are hitting people hard. We understand fare increases if we see improvements and investment, but the Government have no strategic direction for rail in the south-west, and the likelihood of more heavy rain and more problems frankly worries the hell out of people and businesses in particular. If the strategic group is set up, as suggested by Councillor Evans, I hope that the Government will look at its proposals and at the cross-benefit analysis of putting such improvements in place, at the same time as improving our economy, as it will be able to run for 365 days a year.
	What have we in the south-west got to do to gain recognition for our needs, particularly in Whitehall which —I venture to say—does not actually understand the south-west? When Ministers and officials liken a city the size of Plymouth to Hastings, we know we have a problem. We cannot escape the fact that we have a serious problem that will not be resolved by super peak tickets and more money going to rail company shareholders. My hon. Friend the Member for Garston and Halewood (Maria Eagle) has set out a clear case for a different and fairer approach, and I ask the Secretary of State to respond to my specific proposals for the south-west.

Jim Fitzpatrick: Happy new year, Madam Deputy Speaker. I am grateful to my hon. Friend the Member for Garston and Halewood (Maria Eagle) for inviting me to deliver the winding-up speech for the Opposition. That was especially generous given yesterday’s front page on the “ConservativeHome” website and a lead article written by someone appropriately called Harry Phibbs—it was not spelled Fibs, although I am not sure what kind of future he thinks he has in politics. Mr Phibbs writes about a dozen politicians who he says should defect to the Conservatives, and he names me along with some other distinguished colleagues, including the former Transport Secretary, Lord Adonis, and my hon. Friend the Member for Glasgow South (Mr Harris). I am grateful that the shadow Secretary of State trusts me with this winding-up speech in the face of such provocation.
	I understand Mr Phibbs’s confusion, because in the 21st century, party lines can blur on some issues, of which equal marriage and Europe are good examples. On transport, however, and the motion before the House, nothing could be clearer: as my hon. Friend the Member for Garston and Halewood laid out when opening the
	debate, bus fares are up twice the rate of inflation, services are disappearing and a prime ministerial promise of capping rail fares at 1% above inflation has been broken. Fares are increasing not by 4.3%—1% above inflation—but by 9.2%, and even worse, Government documents propose super peak tickets that will cost even more. There are no problems with party lines on this issue. People are either with the vested interests—the train operating companies and the Government—or with hard-pressed commuters, the Transport Committee and the Opposition motion on the order paper. I will return to those issues shortly.
	The Secretary of State generously joined the shadow Secretary of State’s tribute to my hon. Friend the Member for Barrow and Furness (John Woodcock), and—quite correctly—that was well greeted across the House. The Secretary of State has had difficult times during his short tenure. He is regarded as a honourable man but he has been picking up the pieces of the west coast main line franchise fiasco and the Davies commission signalled a Government U-turn—well, certainly a Conservative U-turn—on aviation policy in 2015. My hon. Friend the Member for Garston and Halewood is not the only Member critical of the delay in the announcement by the Davies commission, and she is joined by Mayor Boris Johnson and Lord Heseltine. In my view, however, the biggest mistake—

Patrick McLoughlin: rose —

Jim Fitzpatrick: I hope the right hon. Gentleman will forgive me; he knows that time is very limited but I do not wish to be discourteous. I was about to pay him a compliment in saying that in my view, one of the biggest mistakes made by one of his predecessors, the right hon. Member for Runnymede and Weybridge (Mr Hammond), was scrapping road safety targets that had bipartisan support across the House for 30 years and massively reduced deaths and serious injuries on our roads. Indeed, I commend the Secretary of State because at least he has had the decency to bring in forecasts that acknowledge we need to measure such things and set an ambition to reduce the numbers of people killed and seriously injured on the roads.
	We have heard a number of thoughtful contributions. My hon. Friend the Member for Gateshead (Ian Mearns) made relevant points about the east coast main line and local connections, as well as sharing disturbing data on staffing conditions. The hon. Member for Harrogate and Knaresborough (Andrew Jones), a former Department for Transport Parliamentary Private Secretary, mounted a sterling defence of the coalition, which was a good way to sweeten his special local pleading, which I am sure went down well.
	The distinguished Chair of the Transport Committee covered the recommendation from the new Committee report, to which I shall refer in a moment. The hon. Member for Argyll and Bute (Mr Reid) reminded us how the Lib Dems are the honest brokers in the coalition. He even got the Scottish National party on side, albeit briefly. The hon. Member for Milton Keynes South (Iain Stewart) used his characteristic gentle aggressiveness and Transport Committee experience to criticise Labour’s record, and sought to use European comparisons to justify UK prices. My hon. Friend the Member for Bolton West (Julie Hilling) raised the question of overcrowding
	on her local trains, as well as high ticketing costs and local buses, and the hon. Member for Nuneaton (Mr Jones) majored on the question of costs. My hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) raised a number of local issues as well as discussing major infrastructure items.
	To return to the substance of the motion, according to the Department for Transport’s figures—the annual bus usage statistics for England—there was an increase in bus fares of 6.5%, which means fares have gone up by, on average, twice the rate of inflation. They have gone up by 5.4% in London. As we have heard, research has shown that one in five council-supported bus routes were cut or reduced last year, and that 41% of local authorities have had to axe services. That is not a good record on buses.
	As we have heard, on rail fares, the Prime Minister promised to peg increases at 1% above inflation. That is another broken promise to add to the 70 missed targets headlined in The Daily Telegraph today—although perhaps it is one of the 70. The target was not only just missed; fare increases of up to 9.2% have been registered. And it gets worse: the Transport Committee states in its “Rail 2020” report:
	“We recommend that the Government rule out forms of demand management which would lead to even higher fares for commuters on peak times”.
	Why does it make that recommendation? It does so because of a quote from the Government’s rail fares and ticketing review from last year. The scriptwriters from “Yes, Minister” could not have improved on this language, and hon. Members will need to concentrate on the words:
	“To provide a stronger incentive for behavioural change and more even usage of peak capacity among existing passengers, a wider ‘menu’ of fares could…also include a ‘high peak’ fare priced higher than the current Anytime day fare, a season ticket priced higher than the current season ticket”,
	which means higher prices on routes. Perhaps the Minister will comment on that, because the Secretary of State did not refer to it, even though my hon. Friend the Member for Garston and Halewood raised the super-peak ticket on a number of occasions.
	Labour’s position is a total contrast. The noble Lord Adonis set out his view last year of the policy he followed as Secretary of State in 2010. He said:
	“Prior to 2010, train companies had the right to increase individual fares by up to five per cent above the…RPI+1 per cent level. This was a legacy of the privatisation settlement. I scrapped this flexibility because I believed it was deeply unfair”.
	Of his successor as Transport Secretary, the right hon. Member for Runnymede and Weybridge, Lord Adonis has said:
	“It was my firm intention to continue the policy for subsequent years, and I was mystified when…my successor…reinstated the fares flexibility. The only people who supported this change were the train companies. It is the job of government to be on the side of the travelling public. Labour took this seriously, which is why we scrapped the fares flexibility. By contrast, the present government appears just to be on the side of the train companies.”
	Government Members asked why the policy was introduced only in 2010. That is a legitimate question, but a better one would be: why has it not been repeated since 2010? We have had three years of coalition fares increases, but the policy has not been back.
	The Prime Minister promised capped fares, but it has not happened, and the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), held out the prospect of the end of the era of above-inflation fare increases, but when asked by the BBC when that would happen, he could not answer. The Government are out of touch on rail. My hon. Friend the Member for Garston and Halewood quoted the right hon. Member for Runnymede and Weybridge, who said that rail is a “rich man’s toy”. The Under-Secretary of State—long-serving in the Government; long-suffering on the Opposition Benches—tried to claim over the new year that rail fares were
	“not nearly as expensive as”
	they were “being presented”, and that passengers were paying for a “premium service”. If by “premium service” he means paying more, getting less and standing for longer, I agree. Just this week, the rail Minister was bullied into using rail by the media, which was a sad passage.
	Labour would put passengers first by banning train companies from increasing fares above a cap set by Ministers. Government Members have the opportunity to stand up for their rail and bus commuters by supporting our motion tonight in the Lobby. I strongly urge them to do so and I commend the motion to the House.

Norman Baker: I am grateful for the opportunity to respond to the House on the crucial issue of public transport fares. I thank all those who contributed to today’s debate, and in the time remaining I will try to refer to as many of the issues raised as possible.
	Let me say first that we fully understand and share concerns about the impact of public transport fares on the cost of living. That is why we have committed to retain free concessionary bus travel for older and disabled people. By the way, I applaud bus operators for offering free travel to jobseekers during this month to help them back into work. That is why we protected bus subsidy from the worst of the cuts and provided significant new funding streams to promote bus travel, and that is why we have chosen to keep the average cost of fare rises on the railway to 1% above inflation, scrapping the planned RPI plus 3% that would have otherwise come into effect this month.
	Of course, we have inherited a position from the previous Labour Government who from 2004 onwards adopted a policy of relentless, real-terms year-on-year increases of 1% above inflation, a policy to which I understand the Labour party is still indefinitely committed. I note that from 1997 to 2010, rail fares rose by 66% under the previous Government. This Government, on the other hand, are determined to end the era of above-inflation rises as soon as we can, and I will come on to that in a moment.
	Unlike the Labour party, which presided over a bloated and inefficient Network Rail and did nothing about it, we are taking forward steps with the industry, including a reinvigorated Network Rail, to reduce its costs by up to 30%. That is progressing well and we will release significant funds to return to the taxpayer and to the fare payer.

Oliver Colvile: Does my hon. Friend recognise that in the south-west we have a very big problem with flooding? We need to have the A303 dualled and the A38 sorted out. We need more trains getting into Plymouth early, and we need to ensure that we have more three-hour train journeys.

Norman Baker: I was in the south-west yesterday, in Exeter and Newton Abbott, and I saw fully the problems of the Somerset levels and Cowley bridge in particular. I am taking that specific matter up with Network Rail. As for the other matters, my hon. Friend has put his points firmly on the record, as I am sure he intended.
	Detractors—I am afraid I include those on the Opposition Front Bench—have sought to find the biggest fare rise and portray it as representative of the whole story, which of course is simply misleading. Why they wish to frighten people off the railway, I am not entirely clear. Fares are not as expensive as some wish to present. Passengers who look beyond the headline quotes will see the bigger picture on train fares. Under the rules that permit flexibility within fares baskets—the Opposition apparently now dislike them, but they were very happy with them when they introduced them and carried them through for a number of years—for every fare that increases by more than the average, other fares must increase by less than the average, remain static or fall.
	The hon. Member for Garston and Halewood (Maria Eagle) has made a big play about the 5% available to train companies. I did not hear her condemn the fact that Labour introduced that. I did not hear her condemn that fact that it was introduced on the very eve of the 2010 general election, with a legal proviso saying that it should be reversed on 1 January 2011. I did not hear her condemn the Labour-run Welsh Government, where flex continues to operate—or is it all right in Wales and not in England? Nor did I hear her refer in her opening remarks to the fares that have risen below inflation, or even come down. For example, season tickets between Shenfield and London, and between Gatwick and Croydon, have come down. Why does she want the passengers buying those season tickets to pay more under her arrangements than they are paying under our arrangements? Why does she want commuters between Ormskirk and Blackpool, who have seen their fares come down by 9%, to pay more? This is opportunism with a capital O that we are hearing from the Opposition. Of course, they are not interested in the fares that have come down. They are not interested in helping passengers; they are interested in misrepresenting the position to make political points. [ Interruption. ] Passengers welcome the fact that there are many cheap deals available on the railway that they can take advantage of.
	Let me say this. Of course, there are some higher fares and there are particular higher fares paid by commuters. Everyone on the Government Benches recognises that, which is why we are busy looking at the fares and ticketing review and why we have sought to ensure we get better value from the railways to enable money to be returned to the taxpayer and the fare payer. It is also the case, however, that those who are able to travel outside the busiest periods can benefit from some of the cheapest fares in Europe. For example, advance fares are available from London to Birmingham, Manchester or Leeds for £6, or from London to Glasgow in the middle of the day for less than £30. Cheap advance
	fares have been a major contributor to the massive growth in the number of people using our railways in recent years. It is a real success story, and one of the reasons why we have more people on the railway now than at any time since 1929. That is not the picture the Opposition wish to portray, but it is the truth nevertheless.
	My hon. Friend the Member for Milton Keynes South (Iain Stewart) rightly referred to the need for a balanced comparison between different fares. Independent analysis by the website he referred to, The Man in Seat Sixty-One, has shown that only 15%, or thereabouts, of the tickets available in the UK are among the highest-priced in Europe. The other 85% are equal to, if not cheaper than, their comparators in other European countries.
	On the fares and ticketing review, we are determined to ensure that passenger interests are catered for. We know that the picture can be confusing, even to the initiated, so we are considering how to make fares and ticketing more modern, more transparent, more flexible and more user friendly. In response to the Chairman of the Transport Committee, I say that we are doing a great deal on smart ticketing, which is integral to the fares and ticketing review, and transparency is a key element of that review. By driving innovation and exploiting the opportunities from new technologies, we can make the railway easier to use, tackle crowding and make the best possible use of the existing network.
	On buses, if we believed what the Opposition said, we would think we were approaching the end of civilisation, that there were no buses left on the roads, that it had turned into “Mad Max 3”. Indeed, I get the impression that Labour would grimly welcome that, with an “I told you so” satisfaction, were it to materialise.
	On 28 February, the hon. Member for Nottingham South (Lilian Greenwood) warned of a Beeching-style cull of our bus network. It is true that in some areas local authorities have cut services probably unnecessarily. Campaign for Better Transport refers to Nottingham city council, which is Labour-run, Stoke-on-Trent city council, Darlington borough council, Leicester city council and Halton borough council, so perhaps she should put her own house in order before she starts attacking the Government.
	Here is the good news, which we would not get from the Opposition either: passenger journeys in 2012, measured on the third quarter, are up 0.6% from the same quarter the year before. [Interruption.] Members are shouting about London. Even with London taken out, passenger journeys are down just 0.8% on last year. Is that a Beeching-style cut? Total bus mileage is only down 0.8% as well.
	We are seeing that good innovation can work wonders. In Sheffield, for example, a wonderful partnership has been established by the South Yorkshire Passenger Transport Executive, and the price of multi-operated tickets has been reduced by 14% to stimulate passenger growth further. In Sheffield, First has reduced its commercial fares by almost 40%. Weekly and daily tickets now cost £11 and £3.40 respectively, compared to the previous prices of £18.50 and £4.60. FirstGroup has seen passenger growth higher than 20% across the whole of Sheffield, which equates to more than 50,000 additional First Bus journeys. We want to see bus companies working with local authorities. It is driving up passenger numbers,
	where they make the effort, but where they are slashing and burning, as they are in some local authorities, of course the consequences are different.
	The hon. Member for Harrogate and Knaresborough (Andrew Jones) quite rightly referred to electrification taking costs out of the railway. That is a key purpose in what we are doing, as well reducing carbon emissions. I am very proud to be part of a Government which is electrifying 850 miles of track—one in nine miles of the network being electrified, compared with the nine miles electrified by the previous Government in 13 years. I have heard no apology for that failure to invest in the future.

Alan Campbell: claimed to move the closure (Standing Order No.  36 ).

Question put forthwith, That the Question be now put.
	Question agreed to.
	Main Question  accordingly put.
	The House divided:
	Ayes 237, Noes 311.

Question accordingly negatived.

Business without Debate

EUROPEAN UNION DOCUMENTS

Motion made, and Question put forthwith (Standing Order No. 119(11)),

European Maritime and Fisheries Fund

That this House takes note of European Union Document No. 17870/11 and Addenda 1 and 2, a draft Regulation on the European Maritime and Fisheries Fund repealing Council Regulation (EC) No. 1198/2006, Council Regulation (EC) No. 861/2006 and Council Regulation No. XXX/2011 on integrated maritime policy; and supports the Government’s view that the terms so far agreed under the partial general approach would support delivery of the ambitious Common Fisheries Policy reform package which was the subject of a separate partial general approach in June 2012.—(Karen  Bradley .)
	Question agreed to.

SPEED LIMITS (RURAL LINCOLNSHIRE)

Motion made, and Question proposed, That this House do now adjourn.—(Karen Bradley.)

Stephen Phillips: It is a great honour and a privilege to have tonight’s Adjournment debate and to raise an issue that I know is of great importance to many of my constituents—the issue of speed limits in rural Lincolnshire. The existence—[Interruption.]

Dawn Primarolo: Order. Those Members who are leaving the Chamber should do so quickly and quietly so that we can hear the Adjournment debate.

Stephen Phillips: Thank you, Madam Deputy Speaker.
	The existence of speed limits on our roads does a huge amount to reduce road deaths and accidents, and appropriate speed limits, particularly in residential areas, offer clear benefits in safety. As my hon. Friend the Minister will know, a vehicle travelling at 20 mph at the onset of an incident will stop in time to avoid a child who is running out three car-lengths in front, while the same vehicle travelling at 25 mph—only 5 mph faster—will still be travelling at 18 mph at the three-car-lengths marker. A pedestrian hit by a car travelling at 18 mph is likely to suffer at least serious injury, and at that speed the effect on a child is roughly the same as the effect of falling backwards out of a first-floor window. A pedestrian who is struck at 20 mph has a 97% chance of survival; at 30 mph the figure is 80%; and at 35 mph it falls to 50%. It is plainly not appropriate for low speed limits to operate on every road, even in residential areas, but, as those in communities throughout my constituency tell me repeatedly, the setting and enforcement of proper limits in areas where pedestrians are likely to be found are critical to survivability rates.
	The Government’s responsibility in all this is to set national default speed limits for different types of roads, and the present policy recognises—as it should—that residential areas need lower limits. However, local authorities can set different speed limits on roads where local needs and considerations suggest that the default limit is not appropriate. Many people living in a number of villages in my constituency say that their local speed limits are too high, and that Lincolnshire county council will not listen to their representations and lower them.
	The current Government guidelines clearly state that although 30 mph is the standard speed limit for urban areas, a 40 mph limit may be used where appropriate. Roads considered suitable for 40 mph limits are those that are regarded as higher-quality suburban roads, or roads on the outskirts of urban areas where there is little development. Roads considered suitable for 40 mph limits should be wider than a standard urban street, and should have parking and waiting restrictions in operation and buildings set back from the road. There should be enough space for people on bikes, on horses and on foot to be segregated from the traffic, and there should be adequate crossing places.
	Those guidelines, however, are not always followed. For instance, they do not apply, or have not applied, in the village of Fulbeck in my constituency. Fulbeck is
	bisected by a section of A road with a 40 mph limit, which is inappropriate. The village amenities are on both sides of the road. There is, for example, a popular children’s playground on one side, while the majority of dwellings are on the other. Children and elderly people struggle to cross what is a very busy road with blind bends, which is used by many heavy goods vehicles. Even fit adult villagers feel that they are taking their lives in their hands when they try to cross the road, and motorists are too often misled in a manner that leads to traffic incidents. Only this week, we saw a car leave the road. It is plain to all that the existing 40 mph limit in Fulbeck is simply too high, but my efforts—and those of villagers—to have it reduced to 30 mph have been to no avail, despite Government guidance that that should be the standard speed limit in all villages.

Guy Opperman: I congratulate my hon. and learned Friend on securing a debate that is very important to Lincolnshire. As a result of my campaign in the Allendale road in Hexham, we reduced the speed limit outside a school to 20 mph. Is that not exactly the sort of campaign that the Government should be encouraging? Should not Government guidance strongly recommend the lowering of speed limits in the vicinity of primary schools in particular?

Stephen Phillips: My hon. Friend has made an important and valuable point. I am making general points about speed limits in villages, but there is a very good case for them to be even lower near schools. In a number of parts of my constituency, there are 20 mph advisory speed limits. I think that those should be encouraged, and I hope the Minister will confirm that they will be.
	The Government’s present guidelines also state that in exceptional circumstances—which must, by definition, be rare—a 50 mph limit may be used on higher-quality roads where there is little or no roadside development. Among the roads considered most suitable for that limit are primary distributors with segregated junctions and pedestrian facilities. They would usually be dual carriageway roads or bypasses that have become partially built up. Again, however—at least in Lincolnshire—many of my constituents feel that the guidelines are not being followed, and that there are 50 mph speed limits in residential areas where plainly they should not be.
	One section of the B1188, which runs through Branston, is a good example. It carries in excess of 12,000 vehicles per day, more than many of the A roads that serve Lincoln. None the less, there is a 50 mph limit, despite the existence of a double bend with limited visibility and access to farmyards and residential properties on it. The combined cycle and pedestrian path on this stretch is narrow and in poor condition, and, in the vicinity of the double bend, it is adjacent to the carriageway, with no kerb or verge to protect users. Indeed, it is in such poor condition that many cyclists prefer to use the road, further increasing the risk of collision.
	A 50 mph limit is also in place through West Willoughby, a small village on a main A road in my constituency, where the road has a blind bend with private and farm entrances, a bus stop in each direction, and a post box on one side only. There is also a blind summit just outside the village, which considerably restricts the view
	of drivers both travelling on the main road and trying to turn out on to it. Slow and large farm vehicles are of course a particular hazard in that area.
	In both those cases, there has been no reduction in speed limits in accordance with the Government’s guidelines, despite strong urging from me and the communities affected. In those cases, as in that of Fulbeck, I would like the Minister to undertake to come to the communities concerned and to look at the situation with me and do all he can to persuade the county council to follow the guidance his Department has given.
	I have already mentioned the fact—and it is a fact—that Government guidelines are clear that a village should have a 30 mph speed limit. The present policy in Lincolnshire simply does not allow for that, and instead counter-intuitively insists that a mean speed calculation be used to set the limit. In effect, speed limits are endorsing what are often dangerous speeds through residential village areas.
	In the case of West Willoughby a mean speed calculation meant a reduction from the national speed limit to 50 mph, but anyone who has been through the village will know that that is still too fast for sight stopping distances on the blind bend. Current policy in Lincolnshire does not allow that to be taken into account, however. Indeed, so defective is the policy in its present formulation that it removes the possibility of any discretionary decisions by highways officers, meaning that obvious dangers cannot be considered when they clearly should be.
	The mean speed method of establishing limits is ridiculous. In the course of calculating the mean speed, a recording of vehicle speeds is taken for a week, but that includes the speeds of drivers breaking the limit. Figures provided by Lincolnshire county council from one recording in West Willoughby gave an average of 800 vehicles a day exceeding the national speed limit of 60 mph, with 70 of them exceeding 70 mph. The mean speed is therefore pushed up by those breaking the law, and if that is used to set speed limits, that is clearly potty. If Government guidelines are to suggest the use of mean speeds for calculating speed limits, the methodology should be associated with rural open roads alone, not those passing through villages. I hope the Minister will tell me that he will make that clear to the county council.
	In October 2011, I joined local campaigners from Fulbeck and West Willoughby in meeting my hon. Friend the Member for Hemel Hempstead (Mike Penning), who was then the responsible Minister in the Department for Transport. He agreed with us that no effective response has been made to local concerns for years and that action was needed. What is needed now is for the current Minister to get involved directly. I hope he will be able to tell me this evening that that is what he proposes to do.
	I accept that there are particular circumstances associated with the county in which I make my home, namely the lack of trunk roads and the high number of small villages scattered in ribbon developments. That necessarily means that efficiency will dictate higher speed limits on open roads than might be the case in urban settings, but to suggest that it should dictate the same in village situations is to run the risk that the safety of my
	constituents will be trumped by the need to keep traffic moving between major population centres, which I could not accept.
	I know that the Government are undertaking a general review of their guidelines to local authorities on local speed limits. I therefore want the Minister to tell me that he will listen to the points made by me and my constituents, and that if common sense based on guidance issued by his Department is ignored, as is too often the case at present, he will act to make the guidance on village speed limits binding. Only then will I feel that I have done what I can to ensure the safety on Lincolnshire’s roads of those whom I was sent to this House to represent.

Stephen Hammond: I thank my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) for securing an important debate on speed limits, not only in Lincolnshire, but in rural areas more widely. My hon. Friend the Member for Hexham (Guy Opperman) made a contribution that reiterated that road safety in rural areas is a key priority for many hon. Members, and it is a top priority for the Government and for me. Clearly, road deaths and injuries are not just statistics; they are tragedies for all those affected. Behind the statistics are men, women and children. Much of the harm and cost is avoidable, and those things are not the inevitable consequence of road transport.
	Britain is a world leader in road safety. Although we can be rightly proud of that fact, there can never be any room for complacency. As we set out in the strategic framework for road safety, the focus is on increasing the range of educational options for drivers who make genuine mistakes, while improving enforcement against the most dangerous and deliberate offenders.
	It is well known that a byword of this Government is our belief in localism. Therefore I believe that, wherever possible, local authorities should have the freedom to make their own decisions about road safety, according to their own local needs, and to develop local solutions. In many cases, part of ensuring road safety must involve the speed limits set in those areas.
	I thought it would be useful to state at the outset the Government’s position and thinking on the setting and enforcing of speed limits. As my hon. and learned Friend said, national speed limits are clearly not appropriate for all roads. Traffic authorities set local speed limits where local needs and conditions demand a speed limit lower than the national speed limit. Speed limits need to be suitable for local conditions, and I hope that many in the House would recognise that councils are best placed to determine what those limits are, based on local knowledge and the views of the community, and having regard to guidance issued by the Department, and to the law and enforcement methods available to them.
	As part of our campaign to keep improving road safety, we have already given local authorities the power to introduce 20 mph speed limits and 20 mph zones on their roads if they believe it appropriate to do so. My hon. Friend the Member for Hexham made the point about 20 mph speed limits around schools, and it is exactly this power that we would hope local authorities would use. The Department provides local authorities
	with guidance on setting local speed limits, including 20 mph speed limits, and the conditions in which they should be set, in order to ensure that they are set appropriately and consistently, while allowing the flexibility to deal with local needs and conditions. It is also worth remembering that speed limits are only one part of rural safety management; the nature and layout of the road, and the mix of traffic also need to be considered. To achieve a change in motorists’ behaviour and compliance with the local limits, supporting physical measures are often required, as is local publicity.
	On enforcement, it is of course for the police and local authorities to decide whether to use speed cameras, and how they wish to operate them. However, the Government do not believe that cameras should be used as the default solution in reducing accidents, and nor should they be used as a way of raising revenue. Local organisations and local authorities should seek ways other than just cameras to improve safety on their roads.
	As we explained in our strategic framework for road safety, local communities can directly influence the use of their roads, as my hon. and learned Friend said his community has been doing, by various methods, one of which is the community road watch scheme, whereby local volunteers work with the police to monitor local roads. They can often provide valuable data and suggestions as to local road safety. However, it must be for traffic authorities to set speed limits that strike a sensible balance between the needs of all road users.
	My hon. and learned Friend mentioned the 40 mph zones. The Department particularly wanted to consider appropriate areas—outside villages and in some areas of natural beauty—for using 40 mph zones. The Department wrote to the County Surveyors Society traffic and safety group in 2009 offering funding for local authorities to look at having 40 mph zones with the speed limit painted on the carriageway, so that some of the road safety benefits could be introduced without the ugliness of repeater signs on poles by the roadside. However, it is a disappointment that, to date, no local authorities have taken advantage of that opportunity. There are some 40 mph zones in rural areas, but I hope that others will consider the advantages in signage and road safety of taking advantage of the scheme.
	I hope that I have already made it clear that road safety is a key priority for the Government and for me personally and we continue to take steps to improve the safety of our roads. None the less, if we consider the differential impact of road accidents on rural and urban roads, we can see that some two thirds of fatal traffic accidents happened on rural roads. The Department’s analysis of collision and casualty data shows that in Great Britain in 2011 rural roads accounted for 66% of all road deaths and 82% of car occupant deaths, but under 45% of the distance travelled. It is clear that although we have seen an overall reduction in road deaths and an improvement in the road safety statistics, rural roads have proportionately suffered a major impact.
	My hon. and learned Friend referred to the particular issue in Lincolnshire and I was disappointed to hear that there had been yet another accident in only the last week. Since 2008, the number of people seriously injured on rural roads has increased, bucking the general trend. As my hon. and learned Friend articulated well, local residents in the village of Fulbeck wish to see a lower
	speed limit. He was right to highlight his correspondence with my predecessor, my hon. Friend the Member for Hemel Hempstead (Mike Penning), and I have read it through. It is clear that although the setting of local speed limits is primarily a matter for local authorities, and therefore an issue on which I am loth to and on which I would usually consider it inappropriate to intervene, I encourage local authorities to ensure that their speed limits are in line with the Department’s guidelines and are kept under review as circumstances change. The Government encourage local authorities to consider the introduction of more 20 mph limits and zones, particularly in built-up villages such as that described by my hon. and learned Friend. I look forward to discussing the issue with him when I visit his constituency later in the year.
	My hon. and learned Friend referred to the Department’s guidelines to local authorities on speed limits. We have recently consulted on the revision and reissue of those guidelines on setting speed limits in urban and rural areas and we intend to publish the revised speed limit circular shortly. The guidelines should be used for setting all local speed limits on single and dual carriageway roads in urban and rural areas and aim to provide greater clarity to local authorities about where and how to set those limits. I hope they will find that helpful. The guidance should be the basis for assessing local speed limits and for developing route management strategies and the speed management strategies that can be used in local plans.
	My hon. and learned Friend will be interested to note that the guidance will clearly show traffic authorities that they should keep their speed limits under review with changing circumstances and consider the introduction of more speed limits in urban areas, and primarily residential built-up village streets, to ensure greater safety for residents and users of the road. The Department would expect a 30 mph speed limit to be the norm in villages, but in many villages a 20 mph zone or limit might be more appropriate.
	I note that in the correspondence between my hon. and learned Friend and my predecessor there was some dispute about what might or might not constitute a
	village or the middle of a village. The final decision on whether a settlement is a village for the purposes of setting a speed limit is a matter for local authorities, but my hon. and learned Friend will be interested to hear that we are offering guidance on what definition of a village should be used when a decision about appropriate speed limits is being made; it involves 20 or more houses on one or both sides of the road and a minimum length of 600 metres. If there are fewer than 20 houses we suggest that, when setting speed limits, traffic authorities should make special allowance for any other key buildings, such as a church, shop or school.
	We are also developing a web-based tool, which will allow local authorities to assess the full costs and benefits of any proposed scheme and the speed limits most suitable for local conditions. We hope that all local authorities will take advantage of the scheme when reviewing their local speed limits.
	As I have already stressed, the Government believe that wherever possible local authorities should have the freedom to make their own decisions so that they develop solutions most appropriate for their local needs. The Government do not intend to make our guidance on setting speed limits mandatory. However, we expect local authorities to use and follow the guidance in determining the circumstances for setting local speed limits. I hope that Lincolnshire county council, as it has suggested in correspondence to one of my hon. and learned Friend’s constituents, will use the guidance, keep speed limits under review and be able to access the new tool.
	In closing, I should say that I will be delighted to accept my hon. and learned Friend’s kind invitation to both Fulbeck and West Willoughby; I understand that my officials and his office are already corresponding about a date for that. I look forward to seeing the problems that he has talked about tonight at first hand. I hope that representatives of Lincolnshire county council will have listened to his contribution and those of his constituents and that by the time I reach Fulbeck, the problem will have been solved.
	Question put and agreed to.
	House adjourned.